Adhesion Contract: A type of contract, a legally binding agreement between two
parties to do a certain thing, in which one side has all the bargaining power and uses
it to write the contract primarily to his or her advantage.
For offer/acceptance  objective test  whether a reasonable person would
believe the offeror/offeree intends to offer/accept the terms to form a contract?
Common Law: real estate, services, intangible property
UCC Article 2: transactions of goods
Express Contract: agreement manifested in words
Implied-in-Fact Contract: agreement manifested by conduct
Unilateral Contract: results from an offer that expressly requires performance as
the only method of acceptance.
- Acceptance = rendering performance or promise of performance
Bilateral Contract: offers for other methods of acceptance (typically commitments
on both sides)
Mutual assent  looks at the conduct of the parties from the perspective of a
reasonable person (objective)
- What a reasonable person in the position of the parties would have
thought the words meant.
- Doesn’t take into account subjective beliefs, assumptions, underlying
intentions, etc.
o RS 3 pg. 163
 “an agreement is a manifestation of mutual assent on the
part of two or more persons. A bargain is an agreement to
exchange promises or to exchange a promise for a
performance or to exchange performances.”
o RS 19 pg. 169
 Conduct as Manifestation of Assent
- Meeting of the minds  looks at the intention of the parties (subjective)
(not used to interpret contracts except in a few exceptions)
Merchant: UCC 2-104 (pg. 23) 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 or to whom such knowledge or skill
may be attributed by his employment of an agent or broker or other intermediary
who by his occupation holds himself out as having such knowledge or skill.
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1. IS THE CONTRACT PREDOMINATELY FOR GOODS OR
SERVICES?
 Services, real estate, intangible property? Apply common law
- includes copyrights, patents, etc.
 Goods? Apply UCC
 Mixed contract of goods and services? Predominate Purpose test:
o language of the contract
o nature of business of supplier
o intrinsic worth of materials
o nature of breach
 Jannusch v. Naffziger:  Ct weighed the value of what was
contained within the contract (food truck’s good reputation
(intangible), trade name (intangible), equipment, trailer,
and food inventory (tangibles). Ct determined that value of
goods was greater than value of intangibles so applied the
UCC.
2. IS THERE A CONTRACT? Offer + Acceptance = Mutual Assent
Offer?:
- CL: price & description
- UCC: quantity and intent to be bound
Offer been terminated or revoked?
- 1. Rejection by offeree
- 2. Counter-offers
o rejection of counter-offer by offeror
- 3. Lapse of time
- 4. Revocation
Was offer irrevocable?
- Options
- PE creating one-way binding
- Firm Offer Rule
Was there an acceptance?
- Battle of the forms
- UCC mutual knockout rule
- Internet agreements
Was there mutual assent?
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Was there an offer?
o RS 24 pg. 171
 “An offer is a 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.”
o Content Requirements:
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Common Law  offer must have price and description
UCC  offer must have quantity and intent to be bound
 § 2-204: formation in general
o Contract can be made in any manner
sufficient to show agreement.
 Conduct by both parties that
recognized the existence of the
contract is sufficient.
o Even if some terms are left undefined,
contract does not fail so long as:
 1. Parties intended to make
contract AND
 2. There is a reasonably certain
basis for giving an appropriate
remedy.
o Be wary of offer to bargain/negotiate, rather than offer to
contract/bind!
 RS 26 pg 171 “a manifestation of willingness to enter into a
bargain 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 intend to conclude a bargain until he has made a
further manifestation of assent.”
 Lonergan v. Scolnick: case where guy posted form
letter in paper that he wanted to sell land and
communicated with P about details, then sold to
someone else. Ct says intention of D was to find out
if P was interested, rather than to make an offer to P.
o Other insufficient offers:
 Advertisements (generally)
 Price quotes
 Invitations to bid
 Recital of work offer
 Putting contract out for bids
 ^^^typically all fail for lacking essential terms


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Has the offer been terminated / revoked?
o 1. Rejection by offeree
o 2. Counter-offers
 rejection of counter-offer by offeror
o 3. Lapse of time
o 4. Revocation
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RS §35 pg. 175  “a contract cannot be created by
acceptance of an offer after the power of acceptance has
been terminated.”
 Means of termination  RS §36 pg. 175
RS §38  Rejection pg. 176
 “an offeree’s power of acceptance is terminated
by his rejection of the offer”
o ***Option Contracts  RS §37
 Power of acceptance of option
contracts not terminated by rejection,
counter-offer, by revocation, or by
death of incapacity of the offeror
(unless requirements are met for the
discharge of a contractual duty)
RS §39  Counter-Offers pg. 176
 “A counter-offer is an offer made by the offeree
relating to the same matter as the original offer and
proposing a substituted bargain differing from that
proposed by the original offer.”
 Power of acceptance is terminated by offeree
making a counter-offer.
 Normile v. Miller: real estate agent shows property
to P and P offers, but stipulated on the offer that it
must be accepted by 5:00. D makes changes to the
offer constituting a counter-offer. A different person
buys the property even though P signed and
returned counter-offer before 5:00. P thought that
they had an option contract. Ct says: when D
changed P’s offer, it wasn’t a qualified acceptance
but a rejection of the original offer and contained no
language of option nor did it contain the time-foracceptance provision, so no mutual assent and no
contract.
 ***mere inquiries regarding the possibility of
different terms, a request for a better offer, or a
comment on the terms often do not suffice as
counter-offers.
RS §41  Lapse of Time pg. 177
 Power of acceptance is terminated at the time
specified in the offer, or if no time is specified, at the
end of a reasonable time. (reasonable time based on
analysis of the circumstances)
Revocation by Offeror
 Power of acceptance is terminated if offeror
manifests an intention not to enter into the
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

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proposed contract. RS §42 (Petterson v. Pattberg:
case where P goes to offeror’s house to pay off
discounted mortgage rate and offeror revokes offer
prior to accepting P’s payment  ct said no contract
because offer withdrawn before became binding)
Power of acceptance is terminated if offeror takes
action inconsistent with intention to enter into
contract and offeree received reliable information of
this. RS §43
General offer (advertisement/newspaper) revoked
when termination is given publicity or there is
general notice of revocation. RS §46
Death or Incapacity? Offeree’s power of acceptance
is terminated when the offeree or offerror dies or
loses legal capacity to contract. (UNLESS it’s an
irrevocable option contract offer!)
Was the offer irrevocable?  Option contracts, firm offers, unilateral
contract part-performance rule
o Option Contract: a promise that meets the requirements for the
formation of a contract and limits the promisor’s power to revoke
an offer. RS §25 pg. 171
 Under common law  Promise to keep an offer “open” is
not an option unless consideration is paid for that offer. (If
no consideration for the offer to remain open, promise is
just a gift promise and is unenforceable.)
 Options are 2 contracts: 1 contract to keep option
open and another that actually pertains to the
bargained-for exchange
 ** cases tend to count nominal consideration as real
consideration.
 Under RS  RS §87 pg. 198: an offer is binding as an
option contract if it:
 1. Is in writing and signed by the offeror, recites a
purported (fake) consideration for the making of the
offer, and proposes an exchange on fair terms within
a reasonable time OR
 2. Is made irrevocable by statute.
 Promissory estoppel one-way binding option created
by reliance: If offeror should reasonably expect to induce
action/forbearance of a substantial character by offeree
before acceptance, and offeree does substantially
act/forbear based on inducement from offer, then can be
binding as option contract. RS §87(2) and RS §90
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
An offer cannot be revoked if there has been:
o Reliance that is reasonably foreseeable and
detrimental. RS §90 pg. 200
o Drennan v. Star Paving Co.: case where D
submitted bid to P for paving job (which they
accidentally miscalculated as too low) and P
submitted his total bid based on D’s bid. Ct
held that P’s reliance on D’s bid made D’s
offer irrevocable  P had no reason to know
that D had made a mistake.
o RS §87(2)  reliance on an offer prior to
acceptance.
o RS §90  applies more generally to other
types of detrimental reliance.
 Binding option created by part performance or tender:
where an offer invites an offeree to accept via performance
and does not invite a promissory acceptance, an option
contract is created when the offeree tenders or begins the
invited performance. RS §45 pg. 178
o Firm Offer Rule  UCC §2-205 pg. 32
 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 not time is stated, for a reasonable
time, but in no event may such period of irrevocability
exceed 3 months; but any such term of assurance on a form
supplied by the offeree must be separately signed by the
offeror.
 1. Must be a merchant.
 2. Must include terms of assurance of open offer.
 3. Must be signed by offeror so he knows he is
making a firm offer.
 4. Offer will remain open for no longer than 3
months. (can be less than 3 months if length is
agreed to in firm offer)
 5. Consideration doesn’t matter.
o Binding option created through part performance: RS §45 pg.
178
 Where an offer invites an offeree to accept by rendering a
performance (unilateral contract) and does not invite a
promissory acceptance, an option contract is created when
the offeree tenders or begins the invited performance.
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Was there an acceptance?
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o Acceptance of offer: manifestation of assent to the terms thereof
made by the offeree in a manner invited or required by the offer.
o Acceptance by performance: requires that at least part of what
the offer requests be performed/tendered.  offer can only be
accepted by performance if the offer invites such an acceptance RS
§53
o Acceptance by promise: requires that the offeree complete every
act essential to the making of the promise. Must exercise
reasonable diligence to notify the offeror of acceptance. RS §56 pg.
182. ^^RS §50 pg. 180
o Distance & Delay in Communications
 RS §63  acceptance made in same manner/medium
invited by offeror is sufficient as soon as it is out of offeree’s
possession, w/o regard to whether it ever gets to offeror.
 Mailbox Rule: Acceptance is complete when placed
in the mail, so long as offeree took ordinary
precautions to ensure accurate delivery. RS §66
 Acceptance under option contract  not complete until
received by offeror.
 Reasonable medium is one customarily used in
similar transactions or is medium used by the
offeror. RS §65
o Expressly conditional acceptance is no acceptance! (it’s a
counter-offer)
 Expressly conditional acceptance = “accept” + “if, only if,
provided that, so long as, on condition that,…” etc.
 “Subject to the following terms and conditions…” is usually
not sufficient to classify as an expressly conditional
acceptance.
 Common law: conditional acceptance rejects and replaces
the offer  silence by original offeror indicates acceptance
of the new conditions
 UCC: conditional acceptance rejects and does not replace
the offer.
o Additional terms to contract with acceptance: BATTLE OF THE
FORMS!!!!!
 COMMON LAW 
 Mirror Image Rule: response to an offer that adds
new terms is treated like a counter-offer, not an
acceptance. (no contract!)
o  the two forms have to match each other, if
they don’t, no contract!
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

Last Shot Rule: offeror makes an offer and offeree
responds with new terms and offeror performs
contract  the last document controls the contract.
o Princess Cruises v. GE: P enters into contract
with D for inspection and repair of ship – P
sends purchase order with terms and D sends
acceptance with different terms. (Parties pay
no attention to specific conditions…battle of
the forms)  ct says have to follow terms of
of D’s “agreement” (which is actually a
counter-offer under CL) bc of last shot rule.
UCC  additional terms constitutes as an acceptance
under 2-207
 Additional terms become part of the contract
only if:
o 1. Both parties are merchants AND
o 2. A: Offer does NOT limit acceptance to
terms of offer
 if the offer expressly limits acceptance
to the additional terms then they do
not become part of the contract
o B. Additional term is NOT material
 If it is material, it does not become
part of the contract
o C. Notification of objection to term has not
been given within reasonable time, AND
 If objection has been given to the
additional term within a reasonable
period of time, they do not become
part of the contract
o 3. Offeror does not object to the additional
term
 Mutual Knockout Rule: APPLIES WHEN THE
WRITINGS OF PARTIES DON’T CONSTITUTE A K,
BUT THEY PERFORM AS IF THERE WERE ONE.
o (protection to offeror)
o UCC §2-207(3) If parties begin to perform
on a contract (conduct in recognition of
the existence of a contract), the contract
to be enforced consists of the terms on
which the writings of the parties agree. (If
parties don’t perform, there is simply no
contract because there was never a real
agreement anyway)
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o 1. Match up forms where they agree 
these terms are applied to the contract
o 2. Where the forms don’t agree  knock
out rule applies and contradicting terms
are not enforced unless there is a
manifestation of agreement to them
through conduct or oral statements.
 Brown Machine v. Hercules: D
purchased machine from P and was
injured by it. They had exchanged
boilerplate forms that had differing
T’s & C’s but began performing on the
contract. Ct found P’s indemnity
provision materially altered the
contract and D did not expressly
accept it, thus it did not get into the
contract.
INTERNET AGREEMENTS
o Clickwrap, Shrinkwrap, Browsewrap: Electronic Acceptances
 Clickwrap  before completing the purchase of the
product, the purchaser must scroll through the seller’s
terms of sale and click “I agree”
 Typically for software, services, or tangible products
 Feldman v. Google: P sues D for recovery from
fraudulent click charges in ad-service. D says there
was forum selection clause in clickwrap contract
that P says he never saw. Ct says, there was
reasonable notice that P should have read T&C’s
before clicking “agree” and an RPP would have
known existence of terms.
 Shrinkwrap  applies to when a purchaser buys
something wrapped in shrinkwrap and there’s a notice on
the outside that T’s & C’s are contained within and use or
not returning within specific time constitutes acceptance.
 Majority Rule: when purchaser places order,
vendor is the one making the offer by shipping
product with T&C’s included  If vendor states that
purchaser accepts offer by retaining product for
certain amount of time, purchaser is bound by terms
if he does not return the product within the allotted
time period. (Purchasers are not bound until they
receive the products and terms, inspect them, and
decide whether or not to keep them. (ProCd Rule
from DeFontes v. Dell, Inc.
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
Browsewrap  information made available on seller’s
website, usually free of charge, and usually information that
the user accesses but down not download. Typically, T&C’s
say that by using the website, you agree to T&C’s. Not
required to click an “agree” button. 
 Whether a website user has actual or
constructive knowledge of a site’s T&C’s prior to
using the site? (Hines v. Overstock.com, Inc: ct says
P never had notice of the existence of T&C’s on
website and an RPP user would have had notice
either.
3. DID THE PARTIES HAVE AUTHORITY TO CONTRACT?
People who can’t contract:
- Children
- Mentally ill people
- Drunk people if other person knows they’re drunk
-
-
Actual authority: (discussed in Plowman v. Indian Refining Co.)
o Express  Corporation explicitly confers authority to act as a
specific agent. (usually shareholders and board of directors)
o Implied  Particular officer repeatedly takes action and board
has knowledge of this but doesn’t object.
o Inherent  By virtue of position you have authority (most
jurisdiction’s would say president of company has authority to do
acts that bind the company as long as in scope of ordinary
business.)
o Apparent  company can be legally bound if party leads other
party to reasonably believe that the agent does indeed have the
actual authority to do the act in question.
Persons who cannot contract:
o RS 13: those under guardianship because of mental illness/defect
o RS 14: infants (contracts voidable up until the beginning of the day
before the 18th birthday)
o RS 15: mental illness or defect (pg. 166)
o RS 16: intoxicated persons  person enters into only voidable
contractual duties if other party has reason to know that by reason
of his intoxication he is unable to understand the
nature/consequences of the transaction and he is unable to act in a
reasonable manner in relation to the contract.
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4. WAS THERE VALID CONSIDERATION? (if not, promissory
estoppel and restitution may still allow recovery!)
** Remember: consideration is subjective! (personal
preferences/desires factor in  think Williston tramp hypo)
Consideration
Promissory Estoppel
Restitution
Implied in fact contracts
- Court imposes enforcement bc of conduct
Promissory Restitution
- Material benefit rule
CONSIDERATION:
-
BENEFIT / DETRIMENT TEST: RS §71 pg. 188
o To constitute consideration  performance/return promise must
be bargained for.
o The performance may consist of:
 An act other than a promise or,
 A forbearance, or (Hamer v. Sidway  relinquishing a legal
right = consideration)
 The creation, modification, or destruction or a legal
relation.
o Unequal consideration = VALID CONSIDERATION!
 Batsakis v. Demotsis: the value of Greek money in American
dollars significantly less than what P thought, but this
doesn’t matter. (policy reasons for allowing uneven
consideration = if the ct didn’t allow uneven consideration
it would be an impediment to the free market and there
would be more litigation)
o Insufficient Considerations:
 Illusory promises: RS §77 where the performance is
entirely optional to promisor, this does not suffice as
consideration.
 Past consideration = NO CONSIDERATION! RS §79 pg. 192
 Dougherty v. Salt: “you’ve always done for me”
monetary note for nephew in unenforceable because
no consideration.
 Gifts  donative, charitable, gratuitous, in the future, upon
death.
 Moral consideration = NO CONSIDERATION
 Token consideration (worthless/impossible promise or
act) = NO CONSIDERATION.
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Performance of pre-existing duty = NO CONSIDERATION RS
§73
o Caselaw for consideration:
 Cobaugh v. Klick-Lewis: ct said P taking shot for the hole in
one to win free car was sufficient consideration because he
did not legally have to take the shot and D received
publicity, goodwill, and advertising.
 Marshall Durbin v. Baker: (promise for performance) ct
said sufficient consideration was paid when Baker
remained at company until triggering event for his payment
plan occurred.

PROMISORY ESTOPPEL  detrimental reliance
- Can Promissory Estoppel get P/D recovery?
o Detrimental Reliance  RS §90 pg. 200
 Formula: promise + reliance that is reasonable,
detrimental, and foreseeable + enforcement of contract
is only way to avoid injustice = Ct will apply PE
 Ricketts v. Scothorn: Grandfather gives granddaughter
promissory note telling her to quit her job (like all of his
other grandchildren) and grandfather dies before payment
and executor won’t pay. Ct enforces note (even though no
consideration because it was a gift) because she
detrimentally relied (quit her job) on the payment.
 Harvey v. Dow: Parents told daughter she could build house
on their lot and implied that they would transfer her the
title of the land. Then they had strife and said they
wouldn’t. Ct enforced transfer because daughter made
“substantial improvements” to the land in reliance on its
transfer to her ownership.
 Court usually won’t enforce donative promises
(because no consideration) unless detrimentally relied
upon  Ct tends to try to find consideration in written
donative promises
 King v. Trustees of BU  Ct said BU caring for King’s
papers was sufficient consideration to enforce his
donative promise to place papers in BU custody
RESTITUTION  unjust enrichment
- Can restitution get P/D recovery?
o UNJUST ENRICHMENT = no contract! (Implied-In-Law / Quasi)
 No actual agreement / agreement does not qualify as
contract
 Benefit conferred on other party results in unjust
enrichment
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Contract is implied-in-law for the purpose of giving
benefactor a remedy (quasi contract)
 Benefactor’s remedial gain: 1. market value OR 2.
net ultimate economic gain
 Watts v. Watts  unmarried cohabs living together for long
time. P (woman) sues D when they break up and D tries to
keep everything that they have accumulated throughout
relationship.  Ct finds that P has a claim based on unjust
enrichment of D. (moral grounds)
o RS of Restitution §31 pg. 306:
 “A person who renders performance under an agreement
that cannot be enforced by reason of indefiniteness (for
example, no consideration) or formality (SOF, etc.) has a
claim in restitution against the recipient as necessary to
prevent unjust enrichment. (Restitution cannot be applied
if the person making the claim received the counter
performance specified in the parties’ unenforceable
contract.)
o Typically: A  benefit to B, and B should have known that A
intended compensation. B is unfairly enriched so he must give fair
market value of benefit to A.
 Fair market value = RS §371(a) pg. 294 MAJORITY
APPROACH
 The reasonable value to the other party of what he
received in terms of what it would have cost him to
obtain it from a person in the claimant’s position
 Value Added = RS §371(b) pg. 294 MINORITY APPROACH
 The extent to which the other party’s property has
been increased in value or his other interests
advanced.
o RS of Restitution §116  pg. 282 coursebook
 A person who has supplied things of services to another,
although acting without the other’s knowledge or consent,
is entitled to restitution from the other if:
 1. He acted inofficiously and with the intent to
charge the other for the services, AND
 2. The things of services were necessary to prevent
the other from suffering serious bodily harm or pain,
AND
 3. The person supplying them had no reason to
know that the other would not consent to receiving
them, if mentally competent, AND
 4. It was impossible for the other to give consent or
because of extreme youth or mental impairment, the
other’s consent would have been immaterial.

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o Credit Bureau Enterprises, Inc. v. Pelo (case
where bipolar guy didn’t consent to
treatment but was then charged for
treatment  ct says he has to pay based on
this RS provision).
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Implied-In-Fact Contracts
o Conduct implies a contract and the law thus implies a promise to
pay a reasonable amount for services. (Different than quasicontract because here the court actually finds the existence of a
real contract through conduct, etc.)
 Elements: Recipient of services understands that:
 1. Services were performed for him and not
some other person
 2. Services were not rendered gratuitously, but
with the expectation of compensation, AND
 3. The services were actually beneficial
-
Material Benefit Rule / Promissory Restitution  RS §86 pg. 196
(Promise for Benefit Received)
o “A promise made in recognition of a benefit previously received by
the promisor from the promisee is binding to the extent necessary
to prevent injustice.”
 Elements:
 1. Promisor has been unjustly enriched by a
benefit previously received from the promise.
 2. Benefit was not given as a gift.
 3. Promisor subsequently makes a promise in
recognition of the benefit.
 4. The promise is not binding to the extent that
its value is disproportionate to the benefit.
 5. If these requirements are satisfied, the
promise is binding to the extent required to
prevent injustice.
o Mills v. Wyman: P provided board, nursing and care to D’s son
(over 18 y/o) while he was sick – D wrote letter to P promising to
pay her for his son’s expenses/services after P finished caring for
his son.  Ct said no consideration for promise to pay because the
services were already rendered (no past consideration) and bc D’s
son was over 18, there was no material benefit conferred onto D.
o Webb v. McGowan: P injured saving D from falling rock and P can
no longer work. D promises to pay P for remainder of his life, then
D dies and estate no longer pays and P sues.  Ct says contract
was enforceable because injury to P was legal consideration and D
received material benefit.
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5. HOW SHOULD THIS CONTRACT BE INTERPRETED?
Interpretation
- RS and UCC
Reasonable Expectation
Parol Evidence
INTERPRETATION:
Common Law:
1. Express terms
2. Course of performance
3. Course of dealing
4. Trade usage
UCC:
1.
2.
3.
4.
Express terms
Couse of performance
Course of dealing
Trade Usage
-
What form governs, generally?
o UCC  first form
o Common Law  last form
o Oral Agreements  if parties come to oral agreement and send
each other confirmations of the contract:
 Terms = terms in the oral contract
 Any terms different than those are NOT part of the contract
 Any new terms that agree in writing = part of the contract
 Any new terms that are not in both parties’ confirmations
are NOT part of the contract.
-
RS §203: STANDARDS OF INTERPRETATION
 “In the interpretation of a promise or agreement or a term
thereof, the following standards of preference are generally
applicable”
 (a) an interpretation which gives a reasonable,
lawful, and effective meaning to all terms is
preferred to an interpretation which leaves a part
unreasonable, unlawful, or of no effect.
 (b) express terms are given greater weight than
course of performance, course of dealing, and usage
of trade, course of performance is given greater
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weight than course of dealing or usage of trade, and
course of dealing is given greater weight than usage
of trade.
o Express terms > course of performance >
course of dealing > trade usage
 (c) specific terms and exact terms are given greater
weight than general language
 (d) separately negotiated or added terms are given
greater weight than standardized terms or other
terms not separately negotiated.
o Whose Meaning Prevails RS §201 pg. 232
 Where parties mutually attach a meaning to a term:
(even an uncommon meaning) the term takes on the
meaning the parties intended.
 Where parties attach different meanings to a term: the
agreement is to be interpreted in accordance with the
meaning of party A if B either knew or had reason to know of
the meaning attached by party A and party A did not know
of any other meaning attached by B.
 If court finds that neither party knew or had reason
to know the other party’s attached meaning, there is
no agreement because no mutual assent.
o Joyner v. Adams: P and D assigned different
meaning to term “developed” – P thought
“develop” meant all buildings built and D
followed trade-specific term where develop
means ready for building (site-work and
piping done).  Ct says, no contract because
different meanings.
 Where parties have not decided on an essential term:
term that is reasonable in the circumstances is supplied by
the court. RS 204
o Rules in Aid of Interpretation RS §202 pg. 233
o RS §207  in choosing among the reasonable meanings of a
promise or agreement, the meaning written by the non-writing
party is preferred.
 Hold contract drafters accountable to provide clear,
unambiguous language
-
UCC 303  THE BIG THREE
o Course of Performance 
 Sequence of conduct between the parties to a particular
transaction
 ACTIONS OF THE PARTIES IN CARRYING OUT THE
CONTRACT AT ISSUE
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o Course of Dealing 
 Sequence of conduct concerning previous transactions
between the parties to a particular transaction
 Creates a common basis of understanding for
interpreting their expressions and conduct
 ACTIONS OF THE PARTIES IN CARRYING OUT
PREVIOUS CONTRACTS BETWEEN THEM
o Usage of Trade 
 Any practice / method of dealing having such regularity of
observance in a place, vocation, or trade as to justify an
expectation that it will be observed with respect to the
transaction in question.
 Scope and existence of trade must be proven by facts
Reasonable Expectation
- RS 211  Standardized Agreements
o Where the other party has reason to believe that the party
manifesting such assent would NOT do so if he knew that the
writing contained a particular term, the term is not part of the
agreement.
 Usually applies when there’s boilerplate (insurance
agreements, etc.)
 C&J Fertilizer v. Allied Mutual Ins. Co.: case where
the contract said that you had to show certain level
of damage to collect on burglary policy. Court held
that P could have only reasonably expected to be
required to show visual evidence of damage to
collect, which he did. So the court did not include the
damage standards req. in the ins. co. policy
Parol Evidence
1. Integration?
2. Parol evidence analysis
-
Will parol evidence be allowed in to aid in interpretation of existing
terms?
o INTEGRATION  determined as a preliminary to questions of
interpretation and potential application of parol evidence rule.
o RS 210
 Complete integration: writing that is intended to be the
complete and exclusive statement of the terms of a
contract.
 Agreement is NOT completely integrated if the
writing omits a consistent or additional term which
is agreed to for separate consideration.
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
RS wants wide latitude in for inquiry into
circumstances that bear on the actual intention of
the parties.
 Partial integration: any writing that is not completely
integrated.
 Can be a writing that is intended to be final, but is
not complete because it does not include all of the
details of a transaction.
o UCC 2-202  Final Written Expression
 Terms in writing which are intended by both parties as a
final expression of their agreement may NOT be
contradicted by evidence of prior agreement or
contemporaneous oral agreement.
PAROL EVIDENCE:
o Minority view  Willistonian
 Only look at 4 corners of contract to determine what’s
integrated - no extrinsic evidence.
o Majority view  Corbin
 ANALYSIS:
 1. Did the parties agree for the document to be final?
 2. If so, is it a complete or partial expression of the
terms?
 3. What other evidence should be let in?
o RULES FOR BRINGING IN PAROL EVIDENCE:
 Complete Integration
 Common Law
o Evidence of contradictory terms CANNOT be
introduced (RS 215)
 Evidence would usually be in the form
of prior agreements / negotiations
o Consistent additional terms CANNOT be
introduced (RS 216)
o CAN introduce evidence to explain (RS 214)
 To aid in interpretation of existing
terms
 To show that writing is or is not an
integration
 To establish subsequent agreements
of modifications
 To show that terms were product of
illegality, fraud, duress, mistake, lack
of consideration
 UCC 2-202
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
o No evidence of contradictory or consistent
terms may be introduced
o Can still introduce evidence to explain or
supplement by COP, COD, and trade usage.
 UNLESS such terms are explicitly
negated in the contract.
Partial Integration:
 Common Law
o Contradictory terms CANNOT be introduced
o Consistent additional terms CAN be
introduced
o Evidence to explain CAN be introduced.
(same as above)
 UCC 2-202  Can be explained or supplemented by:
o Evidence of COP, COD, and trade usage
 UNLESS such terms are explicitly
negated in the contract.
o Evidence of consistent additional terms
 UNLESS court finds that the writing
was intended to be complete and
exclusive statement of the terms.
DETAILS RE. EVIDENCE TO EXPLAIN MEETING (applies to both complete and
partial integration)
- Common Law:
o Usage can come in to explain IF:
 Parties have reason to know of the usage in their trade AND
 Neither party knew or had reason to know that the
meaning attached was inconsistent with the usage.
o Course of dealing can come in to give meaning to, supplement, or
qualify their agreement.
 May determine meaning of language or annex an agreed,
but unstated term.
 Basically supplies context.
- UCC:
o Big three always can come in unless they are contradictory to
express terms OR are explicitly rejected in the language.
 EXCEPT boilerplate language that explicitly rejects might
won’t hold off introducing big three.
 Nanakuli v. Shell: court allowed P to introduce
evidence of the big 3 when it contradicted the
express term in the K that D would get to decide
delivery price. (Wilmarth didn’t necessarily like this,
but is possible.)
- GENERALLY,
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o If 2 reasonable interpretations  evidence should come in and
then let jury decide
 Taylor v. State Farm: case where P agreed with D not to file
any “contractual claims” against D. P then filed bad faith
tort claim against D. Ct says K was fully integrated, but
allows interpretation of meaning because term could
reasonably be construed multiple ways so jury should
decide.
5. WAS IS AN AGREEMENT TO AGREE OR WAS THERE A
FORMAL CONTRACT CONTEMPLATED?
DON’T UNDERSTAND THIS STUFF!!!!!!
APPLIES WHEN:
1. Parties have reached agreement
2. No conflicting terms
3. Agreement is incomplete because
a. Either party has chosen to decide certain matters at a later date
(agreement to agree) OR
b. Parties have reached agreement on major provisions but expect a
formal written contract (formal contract contemplated)
AGREEMENT TO AGREE
Old view = if parties know essential term is missing  no contract = agreement to
agree .
o Parties may create a K to make a future K, but only if the first K
contains all of the essential terms/methods to ascertain the terms
in the first K can it be enforced.
 Ex. Walker v. Keith: P signed 10 year lease with option to
renew based on comparative business conditions. After 10
years, P and D couldn’t agree on price. Court held no K
because first contract lacked the essential term of price.
New view = RS 204
- When the parties to a bargain that could suffice as a contract have not
agreed with respect to an essential term, a term which is reasonable may
be supplied by the court.
o If one party reasonably believes a contract has been formed and
the other party knows this  there is a contract.
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o Analysis comes down to INTENT of the parties to be bound in the
long term K.
 Ct’s tend to favor enforcement and will look at potential
longstanding relationships, reliance, etc.
FORMAL CONTRACT CONTEMPLATED
COMMON LAW:
- RS 27  Manifestations of assent that sufficient to make K will NOT be
prevented from doing so just because the parties also intended to prepare
and adopt a written contract (memorial).
o BUT circumstances may show that documents produced before
written memorial were only intended to be preliminary
negotiations.
 Analysis of whether original document is enforceable
turns on an INTENTION to be bound by the parties.
 If no explicit intent, look to other factors:
o Whether the type of agreement is usually put
in writing
 If not, may be binding
o Whether preliminary agreement contains
many details
 If yes, may be binding
o Whether agreement involves a large amount
of money
 If yes, probably didn’t intend to be
bound.
o Whether agreement requires formal writing
for full expressions of covenants
o Whether negotiations indicated that a formal
written document was contemplated
o Extent of the assurances previously given by
the party which now denies a binding
contract and the other party’s reliance on the
completed transaction
 Pops Cones
UCC
- Agreement to agree  Open price term
o 2-305: If parties intend to be bound, K enforceable even if no
price agreed to.
 In such a case, price is a reasonable price at the time of
delivery IF:
 Nothing is said as to price, OR
 Price is left to be agreed to by the parties and they
fail to agree, OR
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o If failure to agree is fault of 1 party, other
party can treat K as cancelled or fix a
reasonable price himself.
 Price is to be fixed in terms of some agreed market
or other standard as set or recorded by a 3rd person
or agency and it is not so set and recorded.
o If parties intended NOT to be bound until the price was fixed
 no K.
 In such a case, backtrack the K.
 Buyer may return any goods already received or if
unable to do so, must pay their reasonable value at
the time of delivery and seller must return any
portion of the price paid on account.
6. SUPPLEMENTING THE AGREEMENT WITH IMPLIED
TERMS, OBLIGATIONS OF GOOD FAITH, AND WARRANTIES
Gap fillers  court’s can write-in if terms are missing
- Implied best efforts
- Reasonable notification requirement
o For dealer-distributer and manufacturer-supplier K’s
Implied obligation of good faith
- Employment contracts
Implied terms = come from general provisions of law (policy decisions regarding
how parties in a specific contract ought to behave)
- “Gap fillers”:
 Available to all parties in particular types of contracts.
 Parties may have to specifically negate them if they don’t
want them in the contract.
 Modern view  Court’s are likely to intervene and
examine intent of the parties.
o Implied best efforts: UCC 2-306(2)
 UCC 2-306(2): With exclusive distribution deals  implied
obligation of BEST EFFORT for both parties:
 Seller use best efforts to supply the goods
 Buyer use best efforts to promote their sale
 ANALYSIS: Use reasonable interpretation to determine
“best efforts”.
 Make assumptions about what the parties would
have agreed on and what would promote an
effective business relationship.
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o Ex. Wood v. Lucy, Lady Duff Gordon: D
fashion designed employed P to have
exclusive right to place her endorsements on
products. P and D would make half profits
based on all K’s. D placed endorsement on
others w/o P knowing and kept profits. D
says she wasn’t bound to this arrangement bc
no consideration and P never bound himself
to make his best efforts. Ct held  this is an
implied promise because P would have
benefitted from his own best effort to make
the endorsement deals.
o Ct saw that the parties intended an effective
business relationship.
o Reasonable notification requirement: UCC 2-309(3)
 Reasonable notification required to terminate an ongoing
oral agreement for the sale of goods in a manufacturersupplier and dealer-distributor relationship.
-
Implied Obligation of Good Faith  only applies once a K is formed
(does NOT apply to negotiations)
 Examples of bad faith (both CL and UCC):
 Seller concealing defect in what he is selling
 Builder willfully failing to perform in full, though
otherwise substantially performing
 Contractor openly abusing bargaining power to
coerce an increase in the contract price
 Hiring a broker and then deliberately preventing
him from consummating the deal
 Conscious lack of diligence in mitigating the other
party’s damages
 Arbitrarily and capriciously exercising a power to
terminate a contract
 Adopting an overreaching interpretation of contract
language
 Harassing the other party for repeated assurances of
performance.
o Good faith obligation usually won’t override express terms.
o RS 205: “Every contract imposes upon each party a duty of good
faith and fair dealing in its performance and its enforcement.”
 RS 228  Satisfaction of the Obligor as a Condition
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
Ex. Morin Building Products Co. v. Baystone
Construction Co.: The warehouse building case and
the rippling effect on the outside.
 Objective Standard: applied when commercial
quality or operative firmness interpretation is
available.  industrial / utilitarian contracts
 Subjective Standard: applied when there is no
readily available standard.  creative / aesthetic
contracts
o UCC 1-304: “Every contract or duty within the UCC imposes an
obligation of good faith in its performance and enforcement.”
 1-202(19)  “good faith” = honesty in fact in the conduct
or transaction concerned.
EMPLOYMENT CONTRACTS
- At-Will Employees:
o Presumption that employee is “at-will” unless specified term is
granted or there is a specified termination clause for cause.
 If term is granted  only can be fired for just/good cause.
o Salary does NOT imply a one-year employment guaranty.
o Promissory Estoppel MAY bar at will firing.
 Examples of bad faith employment:
 Fired bc you wouldn’t do something that violates
public policy
 Discrimination on any major grounds
7. CAN D BAR ENFORCEMENT WITH STATUTE OF FRAUDS?
-
Common Law  RS 110  Classes of contracts covered under SOF:
o Contract of executor/administrator to answer for a duty of his
decedent
o Contract to answer for the duty of another
o Contract made upon consideration of marriage
o Contract for the sale of an interest in land
o Contract that is not to be performed within one year from the
making thereof.
 Service not capable of being performed within a year from
the time of the contract  SOF applies
 Specific time period for more than one year?  SOF applies
 Specific time, more than one year from date of K?  SOF
applies
 Nothing said about time?  SOF does NOT apply
 Indefinite amount of time?  SOF does NOT apply
 RFor life?  SOF does NOT apply
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-
-
o Written memorandum requirement:
 RS 131  Memorandum must: ELEMENTS
 1. Be in writing
 2. Be signed by the party to be charged
 3. Reasonably identifies the subject matter of the
contract
 4. Is sufficient to indicate that a contract has been
made between the parties or offered by the signer of
the other party AND
 5. States with reasonably certainty, the essential
terms of the unperformed promises in the contract.
 Multiple writings can be pieced together to form a
memorandum  RS 132
 Where some writings have been signed and other
haven’t, a sufficient connection between the papers
will allow them to form one memo
o Connection between docs established by
reference to them in same subject matter or
transaction.
PROMISORY ESTOPPEL CAN OVERRULE SOF IF:  RS 139
o 1. A promise, which the promisor should reasonably expect to
induce action/forbearance on the part of the promisee, where
injustice can only be avoided by enforcement.
o 2. Promise DID induce action/forbearance.
o 3. Determine whether injustice can only be avoided by
enforcement.
 Following are significant triggers for enforcement:
 No other remedies, particularly cancellation and
restitution, are readily available or adequate
 Definite and substantial character of the
action/forbearance
 Extent to which action/forbearance shows evidence
of making and terms of promise
 Reasonableness of the action/forbearance
 Extent to which action/forbearance was foreseeable
by promisor.
o Enforcement of asserted oral contracts within the SOF 
possible if P can show that he has suffered injury that is not
compensable on any other basis.
UCC  2-201  Classes of contracts covered under SOF:
o Contracts between merchants for sale of goods for the price of
$500+
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o Must be some writing sufficient to indicate that a contract for
sale has been made between the parties and signed by the
party against whom enforcement is sought.
 Writing NOT insufficient because it omits / incorrectly
states a term agreed upon.
 Contract NOT enforceable beyond the quantity of goods
shown in such writing.
 Quantity of goods MUST be included in the writing.
o Merchant A sends Merchant B a confirmation of their contract
(and Merchant B knows what it is)  this confirmation satisfies
memo requirement:
 UNLESS Merchant B sends Merchant A a notice of objection
within 10 days form reception.
o If contract does NOT satisfy section 1 requirements but is
otherwise valid  enforceable (even though doesn’t mean SOF
requirements) IF:
 Specially manufactured goods  goods are specially
manufactured for the buyer and are not suitable for sale in
the ordinary course of seller’s business and the seller has
already made a substantial beginning to manufacture the
goods.
 Admitting to sale  if party being sued admits that the
contract was made, contract enforceable to quantity of
goods admitted.
o Partial performance as substitute for writing can validate
contract for goods that have been accepted or for which
payment has been made or accepted.
How to satisfy SOF:
- If SOF applies, then requirements must be met for the agreement to be
enforceable.
o 1. If requirements are satisfied  no SOF defense
o 2. If requirements are NOT satisfied  SOF defense applies
o 3. If SOF defense is asserted and established  no legally
enforceable agreement, no contract liability.
8. GROUNDS FOR AVOIDING ENFORCEMENT?
-
UCC applies similar rules as CL re. capacity, etc.
Minors have capacity to incur only voidable contractual duties until the
beginning of the day before his 18th birthday.
o Voidable = can be disaffirmed by the minor, but don’t have to be.
 Once minor reached 18, he has power to affirm the contract
which makes them bound to it.
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To disaffirm: minor must act within a reasonable period of
time or he will be deemed to have affirmed the contract.
Mentally incapacitated people incur only voidable contractual duties by
entering into a transaction if either of the following tests are satisfied:
o Tests: at the time of contract formation 
 Cognitive Test: Person is unable to understand the nature
of the transaction or its consequences
 Volition Test: Person is unable to act in a reasonable
manner in the transaction AND the other party has reason
to know of this condition. (more modern approach).
 Mental incapacity people must make full restitution
to the other party as long as K was in good faith and
other party had no reason to know of incapacity.
Voluntarily or involuntary intoxicated person may void K if:
o 1. Other party had reason to know that he was drunk
o 2. Intoxicated person unable to understand the
transaction/consequences of the K or to act in a reasonable
manner in relation to the transaction.

-
-
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