Contracts Skinny Outline Fall 2012
I.
Theories of Obligation
a. Agreement with Consideration
i. Rules for making agreements
1. Mere recitation not enough (this is or is not a K-Tilbert
v. Eagle Lock)
2. Family member agreements may be
enforceable(Morrow v. Morrow)
3. Party asserting K must prove elements (Morrow)
4. Mutual Assent Required (Raffles)
a. Restatement (second) of K §20
i. (1)-both parties do not know no
agreement
ii. (ii)-either party knows agreement
b. Most courts just decide which interpretation
more reasonable
5. Outward Intention- Lucy v. Zehmer
6. Contract Implied in Fact – not outwardly stated;
inferred from conduct
a. Elements-See outline p. 13
ii. Elements-RPP standard
1. Offer
2. Agreement
3. Consideration
iii. Rules for elements
1. Offer
a. General Requirements
i. Clear, definite and explicite, nothing open
for negotiation (Lefokowitcz)
ii. Advertisements
1. To the public/for certain price
not offer (ford motor credit)
2. To specific person
offer(Lefkowitcz)
iii. Price quotations-generally not
offer(southworth v. olvier)
iv. General language-not an offer
(Southworth)
v. Revocation before acceptance
1. Allowed if no consideration (james
Baird v. Gimbrel Bros)
vi. offer as a promise (promissory estoppel?)
1. NO-James Baird
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2. YES- Drennan v. Star Paving
b. Option K’s- offer + promise to keep offer open for
period of time
i. Common law
1. Any consideration for the offer is
good (25 cents even)
2. Consideration must be delivered to
be binding- Marsh v. Lott
ii. Restatement (second) of K §87 (1)
1. In writing
2. Signed by the offeror
3. Recitation of consideration (but
mere pretense is not good)
4. Exchange on fair terms
5. Within reasonable time
iii. UCC-Firm Offers 2-205
1. Signed by offeror
2. In writing
3. No consideration
4. Reasonable time (no more than 3
mos.)
c. Unilateral v. Bi-lateral offers (presumption of bilateral)
i. Bilateral-acceptance=promise
ii. Unilateral-acceptance=performance
1. Enforceable?
a. Common Law- after action
has begun- Brackenbury v.
Hodgkin
b. Restatement Second of K
§45- beginning
performance is when
promise becomes
enforceable; offerors duty
conditional on completion
of action by offeree
c. Wormser –have to
complete action (changes
mind)
2. Revocation
a. Offeror can revoke BEFORE
act is performed/begunPeterson v. Pattberg
2. Acceptance
a. Definite and unequivocal-Restatement §58(a)
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b. Acceptance can either be by performance or
promise to perform- Restatement second of K
§32
c. Manifestation-White v. Corlies
d. Mailbox Rule- acceptance occurs when letter
placed in the mail-Adams v. Lindell
i. Exception: Option K- acceptance occurs
when offeror receives acceptance
1. Exception: Worms v. BurgessOption K that follows mailbox rule
e. Termination of Power of acceptanceRestatement second of K §36 (see below i-iv)
i. Rejection/counter offer (Akers v. JD
Sedberry)
1. Exception: Restatement Second of
K §39(2)- manifestation of
contrary intention by offeror or
oferee
ii. lapse of time
1. Presumptive Face to Face ruleAkers v. JD Sedberry
2. Specified amount of time by
offeror can trump face to face rule
a. BEWARE of problems with
this- Caldwell v. Cline- 8
days to accept
iii. Revocation-if no consideration
1. By offeror
2. Or third person- Dickinson v.
Dodds
iv. death or in capacity of offeror or offeree
v. option K’s see above
vi. not following the offerors conditionRestatement second §36 (2)
f. independent conditions v. qualified acceptance
(Ardente v. Horan)
i. independent conditions- ACCEPTANCEaccepts and would like other condition
ii. Qualified acceptance- COUTNER-OFFERonly accepting if…
g. Offeror is the master of the offer
i. Acceptance should be the way the offeror
asks- Eliason v. Crenshaw
ii. EXCEPTION-sale of goods- UCC 2206(1)(a) (acceptance can be in any
manner and any means)
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h. Silence as acceptance
i. Generally not acceptance (offeror cannot
create situation where it is)
ii. Exceptions –Restatement Second of K §69
(see outline p. 7)
i. No acceptance
j. Mirror Image Rule
k. Time Limits
3. Consideration
a. Definitions
i. Something sought by the promisor, given
by the promisee in exchange for the
promise
ii. Restatement (first) of K § 75
1. Act
2. Forbearance
3. Creation. Modification, destruction
of legal relation
4. Return promise
b. Requirements
i. Bargained for- Restatement Second of K
§81
ii. Courts do not inquire into adequacy of
consideration-Hardesty v. Smith
1. Exception- when determining
specific performance-Wollums
case
iii. Promise must induce consideration (but
does not have to be the only cause)
Restatement second of K §81 comment b
iv. Benefit to Promisor (in comparison to
gratuitous promise)
c. Problems
i. No Consideration
ii. Not bargained for
iii. No explicit Intention
iv. Gratuitous Promise
v. Mere Recitation
vi. Mere Pretense
vii. Thank You Consideration
viii. Forbearance
ix. Lack of mutuality of agreement (atwill/illusory)
x. Pre-existing Duty Doctrine
d. Functions of Legal Formalities
i. Evidentiary
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ii. Cautionary
iii. Channeling
iv. Remedies
1. Expectancy (unless too speculative) Reliance (see
outline p. 25)
2. Liquidation Clauses (and not penalties) –how much
party will pay if breaches
a. Common Law Test (Restatement of K §339)
i. Fixed amount is reasonable forecast AND
ii. Harm incapable or difficult to estimate
b. UCC Test 2-718(1)- p. 11 of outline
i. Estimated in light of anticipated OR actual
harm
ii. Difficult to determine
c. TN Test (presumption of penalty)
i. Reasonable in relation to anticipated
damages
ii. Measured prospectively when K entered
into
iii. AND not grossly disproportionate to
actual damages
d. Dunbars suggestions for drafting –outline p. 12
3. Limitation of damage clauses- party cannot get more
than this
a. Unconscionable? (Rinaldi)
b. UCC Test 2-719(3)
4. Mental Distress-not recoverable generally-see outline
p. 24
a. Exception –is allowed in breach of personal
contract
5. Punitive Damages-generally cannot get
b. Promissory Estoppel
i. Elements- Restatement (First) of K §90
1. Promise
2. Promisor should reasonably expect to induce action or
forbearance
3. Action/forbearance definite and substantial character
4. Promise must induce the action/forbearance
5. Injustice can be avoided only be enforcement of
promise
ii. Problems with Promissory Estoppel
1. No enforceable promise
2. Gratuitous Promise
3. Promise to Charity
4. Promise to Convey Land
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5. Gratuitous undertaking of bailee
6. Waiver
7. No reliance
8. Pre-Agreement Discussions
9. Conditional Promise
10. Jury decides elements (Except for the last)
iii. Remedies
1. Reliance
a. Cannot get more than expectancy
2. Expectancy as a substitute for reliance
3. Specific Performance
c. Promissory Fraud
i. Elements
1. Promise
2. Intent not to perform promise
ii. Remedies
1. Punitive Damages
2. Expectancy?
d. Unjust Enrichment
i. Other names
1. Quasi Contract
2. Quantum Meruit
3. Contract implied in Law
ii. Elements
1. Unjustly enriched
2. At another’s expense
iii. Exceptions to Unjust Enrichment
1. Voluntary
a. Fiend or services?
2. Officious Intermeddler
a. Free Choice Principle
3. Services rendered to give business Advantage
iv. UI and use of unenforceable Ks
1. Calculate Damages
2. Prove person is not volunteer or officious intermeddler
3. Willful Abdonment of K
a. Contract K
i. Substantial performance?
b. Employment K
i. Services rendered?
c. Purchase Agreement
i. Defaulting purchaser?
v. Remedies
1. Restitution (see outline p. 25)
2. For services
a. Full services – amount already paid
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3. Employment K
a. Amount of services-damage to the employer
4. Purchase Agreement
a. Purchaser breaches seller gets expectancy (not
necessarily keeping the byers money so not
unjustly enriched)
e. Promise from Past Benefit Received
i. Elements-Restatement Second of K §86(1)
1. Promise
2. Made in recognition of benefit previously received
3. Necessary to prevent injustice
ii. Types of Non-binding promises- Restatement Second of K §86
(2)
1. Promise conferred as a gift
2. Value of promise disproportionate to the benefit
iii. Factors to Consider- Comment B Restatement Second of K §86
1. Definite and substantial character of the benefit
received
2. Formality in making promise
3. Part performance on promise
4. Reliance on promise or probability of reliance
iv. Remedy
1. The amount of the promise
v. types of cases that use PFPBR
1. Debts barred by statute of limitations
2. Debts incurred by infants
3. Debts of Bankrupts
4. Moral Obligation
f. Arising from Tort
i. Breach of Professional K
1. Can choose between K and Tort
ii. Nonfeasance v. Misfeasance
1. Nonfeasance Only K
2. Misfeasance choice
iii. Elements of Fraud -Hargrave v. Oki Nursery
1. Representation of material
2. False
3. Intent to deceive
4. Reliance
5. Injury
iv. Remedies
1. Prob. Breach of K-- >so Expectancy
g. Arising from Form
i. Elements
1. Seal
2. In writing
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h. Statutory Warranty
i. Express Elements
1. Promise or Affirmation of Fact and NOT opinons
a. Presumption that statements are affirmations of
fact (not opinions)
b. Opinions (puffing talk) are:
i. Not specific
ii. Equivocal
iii. Reveal the goods are experimental
2. Statement Pat of Basis for Bargain
a. Reliance not needed anymore
b. Burden on D to prove that bargain does not rest
on promise
c. Statement only needs to be A factor inducing
buyer to enter bargain
d. EXCEPTION: when buyer inspects waives
objection to warranty except where the defect
was not visible
3. Breach of Warranty
ii. Implied of Fitness-UCC 2-315
1. Elements
a. purchaser intends to use good for particular
purpose
b. seller knows that the purchaser intends to use
good for this purpose
c. buyer relies on the seller’s skills or judgment to
furnish suitable goods
d. seller knows the buyer is relying on goods
e. breach of warranty
iii. Implied of Merchantability UCC 2-314
1. Elements
a. merchant/seller who deals with particular type
of goods/Property
b. standard or performance of conformity
c. failure of product to meet standard
d. damages
iv. Remedies
1. Buyers damages for breach in regard to accepted goods
2-714(2)
a. Difference (at the time and place of acceptance)
between the goods as accepted and the value
they would have been if they had been as
warranted
II.
Remedies
a. Expectancy
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i. Types
1. General Damages
2. Special Damages (consequential)
ii. Ways to Measure
1. Cost of Performance
2. Fair market value
3. Construction K
a. Contractor Breaches
b. Homeowner Breaches
4. Employment K
a. Employee Breaches
b. Employer Breaches
5. Sale of Goods
a. Seller Breaches- 2-713
i. Cover-2-712
ii. Breach of accepted Goods 2-714
b. buyer Breaches-2-708
i. 2-706 Sellers Resale
iii. Limitations on Expectancy Damages
1. Cannot recover more than if K fully performed-Peavy
House
2. Damages must be reasonable and not unconscionablePeavyhouse
3. Damages measured to the injured party –Restmnt
Second K §347 Comment B
4. Measure damages against original K (two roofs case)
5. Damages must be reasonably ascertainable/Not
speculative
a. New Business Rule
i. Exception: single Venture
6. Special Damages must be communicated and known to
both parties- Restmnt second of K §351(3)
a. Exception: Tacit Agreement Test
7. Disproportionately Limit
a. Exception: UCC 2-715(a)- Consequential
Damages include ANY LOS
8. Mitigation Limit
a. Services
b. Purchase K
c. Employment Agreement
9. Denial of loss expectancy in Medical Context
a. In MASS
b. Not in NH
10. Denial of recovery for loss of reputation ro goodwill
11. Denial of loss expectancy to attys
12. Interest
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13. Attys Fees
b. Reliance
i. Damages incurred after the K before the breach; anything
incurred in reliance on the K
ii. Exceptions Limits
1. Remoteness
2. Damages before signing of K
3. Losing K
c. Restitution
i. Ways to Measure (generally non-breaching party gets the
greater value)
1. Restatement Second of K §371(a)
2. Restatement Second of K §371 (b)
3. Craswell Approach (b)
4. Craswell Approach (d)
ii. When Restitution is used & Rules
1. Non-breaching Party conferred a benefit and elects
restitutionary recovery
2. Losing K -Where a non-breaching P conferred a benefit
but had a negative expectancy
3. Material BREACH- Non-Breaching Party Conferred
Benefit  cannot prove lost expectancy or reliance
4. P conferred a benefit but K is invalid, frustrated or
unenforceable
5. P has materially breached the K after conferring a
benefit
d. Other
i. Punitive
ii. Pain & Suffering
iii. Nominal
iv. Specific Performance
1. Land Ks
2. Personal Property (do not generally get)
a. Exception: if not adequate remedy at law- see
outline p 27
3. Sale of Goods-do not generally get
a. Exception: if unique items Ucc 2-716- see outline
p. 27
4. Personal services (generally do not get SP)
5. Unfair advantage (generally no SP)
6. Lack of mutuality of Performance
7. Hard or Impractical to Enforce
III.
Other Contract Rules
a. Shoe Principle-assignee stands in shoes of assignor
b. Statute of Frauds
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i. Requirements- Restatement Second of K §131
1. Writing –outline p. 28
a. Subject matter
b. Indication of K made
c. essential terms with reasonable certainty
ii. Purpose of Statute of Frauds
iii. Types of K that require Statute of Frauds
a. Land
b. Marriage
c. Agreements not to be performed within a year
d. Sale of real esatate/realtors
e. Wills
f. Surety
i. Exception: Main Purpose Rule – see page
29 of outline
g. Sale of Goods UCC 2-201 (sale of goods more
than $500)
i. Exceptions see p. 29 of outline
iv. Questions to ask
1. Does the Statute apply
2. Does a memo, note or other writing satisfy statute?
3. Exception?
4. Other Doctrine Mitigate the effect of noncompliance?
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