i. Collateral agreement: (1) agreement collateral in form; (2) doesn’t contradict
I. Enforceability
A.
Consideration: bargained-for detriment
writing; (3) parties ordinarily wouldn’t include in writing
i. Donative v. bargaining intent; settlement/forbearance; illusory promises
ii. Rest 216 consistent additional term (naturally test): (1) consistent add term
B.
Unjust enrichment: Implied in law contract, quantum meruit, quasi contract
supplements partially integrated writing; (2) consistent add term =
i. Past consideration (no contract)
agreed to for separate consideration or naturally omitted f/ writing
ii. (1) enrichment, (2) unjust (3) effect of contract
iii. Rest 214 exceptions to PER: (a) whether writing integrated; (b)
complete/partial integration; (c) interpret meaning/ambiguity; (d)
C.
Reliance
i. Equitable estoppel: misrepresentation of act, not intent
illegality, fraud, duress, mistake, lack of consideration (other
ii. Rest 90 Promissory estoppel: (1) promise induces reliance; (2) reliance
invalidating causes); (e) ground for granting/denying rescission,
foreseeable; (3) avoid injustice
reformation, specific performance, other remedies
iv. Rest 217 oral agreement/condition precedent exception
II. Mutual Assent
v. Rest 201 whose meaning prevails (modified objective theory for
A.
Intent of the parties
i. Subjective (out of favor), objective (in favor, protects justifiable reliance on
interpretation)
outward manifestation of intent)
vi. Plain meaning rule (doesn’t exist, there’s always latent ambiguity)
ii. Rest 20 Effect of misunderstanding (modified objective: when no subjective vii. UCC 2-202: partial integration can be explained supplemented by (a) trade
mutual assent, find party at fault)
practices; (b) consistent add terms (cmt 3 certainly test)
viii. 1-303 course of performance, course of dealing, usage of trade
B.
Formation
i. Offer acceptance under objective theory
ix. Contract of adhesion
ii. Offer: manifestation of willingness to conclude bargain w/out taking
1)
Duty to read
additional action, creates power of acceptance in offeree, preliminary
2)
Rest 211 standardized agreement: (1) contract of adhesion is
negotiations if offeror intends further action
integrated writing; (2) doesn’t matter if you read/understand; (3)
iii. Dickinson v. Dodds: offer revoked moment offeror manifests intent to no
Llwellyn: doctrine of reasonable expectations
longer be making offer
3)
Richards v. Richards public policy
iv. Acceptance: manifestation of intent by offeree to bring contract into
IV. Defenses
existence by accepting offer
A.
Bargaining defect
v. Deviant acceptance = counter-offer: no contract under mirror image rule,
i. Misconduct (palpable unilateral mistake), misrepresentation, concealment,
unless variance immaterial
nondisclosure; fraud, scienter (misrepresentation of fact, not opinion);
vi. Rest 69 Silence as acceptance: offeree benefits w/ opportunities to reject,
tort of deceit: expectation, not reliance damages
understanding b/w parties, previous dealings
ii. Duress: (1) wrongful threat precluding party under duress f/ exercising free
vii. Rest 63 Mailbox rule: (1) acceptance effective upon dispatch; (2) acceptance
will; (2) threatened party cannot find reasonable alternatives
of option contract effective upon receipt
iii. Pre-existing duty rule: free up consideration to modify contract
viii. Unilateral contract: offeror accepts only performance as acceptance, parties
iv. Mutual mistake (substance, not quality/value): shared erroneous assumption
not bound until performance rendered
about material fact
ix. Options: irrevocable offer: created by (1) contract, (2) 90 promissory
v. Mistake type unilateral mistake: (1) fact, not judgment/opinion; (2) prompt
estoppel, (3) firm offer
notice; (3) restore status quo; (4) mistake material; (5) mistaken party
1)
Rest 45 part performance or tender: (1) offer to enter into unilateral
used reasonable care
contract becomes option when offeree tenders/begins performance
vi. Impossibility: objective standard
(cmt f: preparations of performance don’t create option)
vii. Frustration: (1) frustrating event unforeseeable; (2) consequences of
2)
Rest 87 option contract: (1) signed writing by offeror reciting nominal
frustrating event (near) total destruction of value of counter-performance
consideration; (2) promissory estoppel reasonably inducing
viii. UCC 2-209 modification, rescission, waiver: (1) agreement to modify needs
action/forbearance of substantial character
no consideration; (2) and (3) signed writing/SOF requirement; (4)
x. Battle of form common law last-shot rule
modification w/out writing can operate as waiver; (4) waiver retractable
xi. Preliminary agreement: Type I fully binding contract – substantial agreement
if just (cmt 2 good faith requirement)
on everything, only needs seal; type II: open terms, parties bound to
ix. UCC 2-613 casualty to identified goods, impossibility is defense
negotiate in good faith
x. UCC 2-614 substitute for incidental issues (impossibility not defense)
xii. UCC 2-205 firm offers: offer by merchant to buy/sell goods in signed writing xi. UCC 2-615 excuse by failure of presupposed conditions: commercial
can be held open 3 months w/out consideration
impracticability defense for sellers
xiii. 2-207 additional terms in acceptance/confirmation: (1) acceptance/written
xii. UCC 2-616 procedure on notice claiming excuse: buyer can terminate/
confirmation w/ additional/diff term = acceptance unless expressly
modify contract after notification of material/indefinite delay
conditional; (2) b/w merchants additional term part of contract unless
B.
Bargain Defects
offeror limits acceptance; material alteration, notification of objection;
i. Rest 205 duty of good faith and fair dealing in performance & enforcement
(3) conduct can establish contract, terms = agreed writings & gap fillers
ii. Rest 208 unconscionability: (1) procedural lack of meaningful choice; (2)
(cmt 4 terms causing surprise/hardship; cmt 5 acceptable additional
substantive contract terms unreasonably favorable to one party
terms; cmt 6 knock-out rule)
iii. UCC 2-312 warranty of title: seller impliedly warrants legal ownership
xiv. 2-204 formation in general (1) conduct by both parties sufficient to show
iv. UCC 2-313 express warranties: (a) affirmation of fact/promise; (b)
agreement can establish contract; (2) moment of formation can be
description of goods; (c) sample/model; (d) formal words unnecessary,
undetermined; (3) open terms/indefiniteness do not void contract parties
but opinion/value statement insufficient; cmt 4: express warranties (basis
intended to make
of bargain) cannot be disclaimed by general disclaimer clause
xv. Gap fillers: 2-305 open price terms, 2-306 output, requirements, exclusive
v. UCC 2-314 implied warranty of merchantability: (1) merchants only; (2) (c)
dealings, 2-307 delivery in single lots/several lots; 2-308 absence of
fit for ordinary purposes; (3) arise f/ course of dealing/ usage of trade
specified place of delivery; 2-309 absence of specific time provisions,
vi. UCC 2-315 implied warranty fitness for particular purpose: when buyer
notice of termination; 2-310 open time for payment or running of credit,
relied on seller skill/judgment
authority to ship under reservation; 2-311 options and cooperation
vii. UCC 2-316 exclusion/modification of warranties: (1) inoperative if
respecting performance
unreasonable; (2) conspicuous writing that mentions
merchantability/fitness; (3) unless circumstances indicate otherwise,
III. Effect of a Writing
A.
Statute of Frauds: requirement of writing for enforceability (still needs to
implied warranties can be disclaimed by (a) as if, w/ all faults; (b)
prove contract exists)
defects revealed by buyer examination; (c) trade usages
i. a). Contract w/in statute: (1) sale of interest in land; (2) sale of goods > $500 viii. UCC 2-317 cumulation & conflict of warranties
(UCC); (3) suretyship or guaranty; (4) incapable to be performed w/in
ix. UCC 2-318 3rd party beneficiaries express/implied warranties cannot be
one year; (5) in consideration of marriage; b). Writing in the vicinity; c).
excluded/limited: A. family members and guests, personal injury; B.
Rest 139 part performance exception
reasonable user, personal injury; C. any person, economic loss
ii. UCC 2-201 (1) contract enforceable w/in quantity in SOF; (2) b/w merchants x. UCC 1-304 obligation of good faith; 1-201(20) honesty in fact and
signature not required in receiving party doesn’t object in 10 days; (3)
observance of commercial standards of fair dealing; 1-302(b) good faith
exceptions (a) specially manufactured goods, (b) admission in court, (c)
cannot be disclaimed
part performance (severable)
xi. 2-302 unsonscionable contract/clause: cmt 1 clauses one-sided, prevention of
B.
Parol Evidence Rule: limits meaning of contract to integrated writing (final
oppression and unfair surprise
& complete/partial agreement); bars extrinsic evidence or prior/contemp
agreements; admitted evidence must be reasonably susceptible to writing
ix.
V. Conditions
i. Writing in contract/event in universe that makes party’s obligation
contingent, not absolute, device to rearrange default risk allocation
ii. Express conditions strictly enforced: expressly conditional language: unless,
provided that, on condition that
iii. Rest 227: interpret term to reduce forfeiture
x.
iv. Construe express term to be promise, not condition (look at intent of parties,
risk allocation)
xi.
v. Excuse non-occurrence of condition if performance becomes impossible
vi. Prevention: when party materially contributes to non-occurrence & inaction
is wrongful
vii. Waiver: voluntary relinquishment of known right (not retractable); reliance xii.
retractable if doesn’t cause prejudice against other party
viii. UCC 2-209 collapses waiver and reliance (both are retractable)
ix. Constructive conditions/implied conditions/promissory conditions
x. Condition satisfied if substantial performance, but might still be breach of
contract (expectation damages)
xiii.
xi. Material breach: breach of contract is also non-occurrence of condition
xiv.
1)
Non-breacher can sue on-contract for total breach or partial breach
2)
Or sue off-contract: rescind and recover restitution
xii. Personal satisfaction can be a condition: (1) objective test for operative
xv.
fitness, utility, marketability; (2) subjective test for fancy, taste,
xvi.
sensibility, judgment
xiii. Rest 253 effect of repudiation: treats anticipatory breach as present breach xvii.
xiv. Rest 251 when failure to give assurance treated as repudiation
xv. UCC 2-601 perfect tender: if goods/tender fail in any respect to conform to xviii.
contract, buyer may (a) reject the whole (seller equivalent in 2-703(f)
cancel for nonpayment) treats all promises as promissory conditions
xvi. Scope of UCC for hybrid contracts: (1) disaggregate components; (2) essence xix.
of contract; (3) predominant performance; (4) UCC by analogy
xvii. UCC 2-602 rejection: (1) notice to seller w/in reasonable time; (2) after
rejection, treat goods as seller’s agent
xviii. UCC 2-606 acceptance: (1) by notice after reasonable opportunity to inspect xx.
goods or failure to reject or treating goods as your own
xxi.
xix. UCC 2-508 cure (1) time for performance not yet expired; (2) seller has
reasonable grounds to believe tender would be acceptable w/ money
xxii.
allowance, more time to substitute conforming tender
xx. UCC 2-605 waiver of buyer’s objections by failure to particularize (works in
conjunction w/ 2-508 cure)
xxiii.
xxi. UCC 2-607 effect of acceptance: precludes rejection
xxii. UCC 2-608 revocation of acceptance: (1) buyer may revoke acceptance if xxiv.
non-conformity substantially impairs value to him
xxiii. UCC 2-612 installment contract (1) authorizes delivery of goods in separate
lots; (2) buyer may reject any installment if substantial impairment
(partial breach); (3) if nonconformity substantially impairs whole
contract, then breach of the whole (total breach)
xxiv. UCC 2-610 anticipatory repudiation if substantial impairment may (a) await
performance; (b) resort to remedy for breach; (c) suspend own
xxv.
performance
xxv. UCC 2-611 retraction of anticipatory repudiation (2) must include assurances
under 2-609
B.
xxvi. UCC 2-609 right to adequate assurance of performance: (1) when reasonable
i.
grounds for insecurity arise, may in writing demand adequate assurance
of due performance
ii.
iii.
VI. Remedies
A.
Expectation interest
i. Construction contract: cost of completion or diminished value (econ. waste) iv.
ii. Pareto Paradox: limiting scope of expectation damages facilitates efficient
breach, but also undercompensates non-breaching party
v.
1)
Efficient breach increases social utility: Pareto efficiency/superior
situation: when someone better off w/out someone else worse off
vi.
2)
Baseline utility assessed at time of contracting, parties’ subjective
valuation taken as given
vii.
iii. Hadley foreseeability test: expectation damages foreseeable when (1)
C.
naturally arise; (2) w/in contemplation of parties/on notice
i.
iv. MindGame certainty test: amount of damages needs to be sufficiently nonii.
speculative and certain (causation test)
iii.
v. No damages for mental distress/intangibles unless contract has elements of
personality, emotional injury intrinsically tied to essence of contract
iv.
vi. Duty to mitigate: can’t pile up damages (negative); reasonable efforts to find
comparative performance/substitute (affirmative)
v.
1)
Class bias, income f/ substitute performance only deductible when
vi.
mutually exclusive, unemployment benefits not deductible
vii. Lost volume seller: if two sales mutually exclusive  not lost V seller; if
vii.
both sales could’ve been made  lost V seller
viii.
viii. Kaldor-Hicks efficiency: net gain > net loss, Pareto transfer could but
shouldn’t occur (transaction cost): distributional consequences
ix.
independent f/ efficiency concerns
Equitable remedy (specific performance): pure expectation remedy
1)
Injury irreparable, legal remedies inadequate
2)
Balance of equities rest in P’s favor, consider (1) judicial supervision
cost; (2) compelled association; (3) economic inefficiency (precludes
efficient breaches)
Negative injunction available when breach causes distinct competitive injury,
might have coercive effect
Coase theorem: parties will negotiate to efficient outcome and widget will
end up w/ highest value user: caveats (1) distributional consequences;
(2) transaction costs cannot be prohibitive (goal of legal remedies is to
minimize transaction costs)
Liquidated damages: parties specify damages b/c distrust of default rules,
protect intangibles, deter breach (in terrorum); pure expectation remedy;
two prong test: (1) Damages difficult to estimate/ascertain; (2) whether
amount fixed is “reasonable forecast” of just compensation (single look
when contracting, second look also when breach)
UCC 2-710 seller’s incidental damages
UCC 2-703 seller’s remedies when buyer wrongfully rejects/revokes
acceptance, fails to pay, repudiates: (a) w/hold delivery, (d) resell and
recover, (e) recover and action for price, (f) cancel
UCC 2-706 seller’s resale: (1) contract-resale price differential
UCC 2-708 seller’s damages for non-acceptance/repudiation: (1) contractmarket differential; (2) lost volume seller (lost profit)
UCC 2-709 seller’s action for price (right to specific performance): (1)(b)
only if resale fails; (2) seller gets paid and goods belong to buyer
UCC 2-715 buyer’s incidental and consequential damages: (1) incidental; (2)
consequential (a) seller had reason to know (Hadley w/in contemplation,
notice); (b) injury to person or property f/ breach of warranty
UCC 2-711 buyer’s remedies in general: (1) when seller fails to
delivery/repudiates, buyer rightfully rejects/revokes acceptance, buyer
may cancel, recover price paid, and (a) cover; (b) recover damages;
(2)(b) specific performance/replevy goods
UCC 2-712 cover (2) contract-cover price differential
UCC 2-713 buyer’s damages for non-delivery/repudiation (1) contractmarket price differential
UCC 2-714 buyer’s damages for breach in regard to accepted goods: (2)
damages for breach of warranty = diff b/w value of goods accepted and
value as warranted; (3) incidental and consequential damages
UCC 2-716 buyer’s right to specific performance/replevin: (1) when goods
are unique; (3) if unable to effect cover
UCC 2-718 liquidated damages, deposits: (1) reasonable amount in light of
anticipated & actual harm (second look), difficulties proof of loss,
inconvenience/nonfeasibility of other remedies; unreasonable  void as
penalty; (2) if buyer breaches, gets back deposit minus liquidated
damages, if no liquidated term, 20% total performance OR $500
(whichever smaller); (3) buyer’s right to restitution offset by seller’s
right to recover damages
UCC 2-719 modification/limitation of remedy: (2) not enforced if remedy
fails of essential purpose; (3) limiting damages to personal injury prima
facie unconscionable
Reliance interest
When lost profits uncertain/speculative, award non-speculative subset of
expectation: reliance expenditures to restore status quo ante
Should not matter if expenditure made before or after contract formation
Expectation interest = liquidated unknown and unknowable opportunity costs
P traded for the expectation under the contract entered into
Reliance damages minus provable losses (makes sense if on-contract remedy,
doesn’t if off-contract restoration of status quo ante)
If we want full reliance recovery  losses too speculative (includes
intangibles) and D has BOP
If we don’t want reliance recovery  D has substantially performed and
breach didn’t cause lost expectations (P made a bad deal) and P has BOP
Foreseeability, certainty, duty to mitigate also apply
Restitution interest (quantum meruit, implied in law, quasi contract)
Off-contract: prevent unjust enrichment, permit restitution:
Only available when P confers benefit, enriches D
P has to rescind instead of perform after breach (Clark-Fitzpatrick: when P
proceeded on-contract to complete performance, no restitution)
Only available when contract has not been virtually fully performed before
breach (Oliver v. Campbell)
Restitution is subset of reliance that benefits D
If we want to approximate performance/protect risk allocation  argue as
reliance (w/ deductible losses)
If we want to prevent unjust enrichment  argue as restitution
Off-contract reliance (promissory estoppel): when there is neither on-contract
remedy or unjust enrichment
Disgorgement of profits: when breach deliberate & damage remedy
inadequate