Contracts Long Outline
I. Introduction
Restatement
1. § 1: Contract: promise/set of promises which if breaches law gives remedy,
or the performance which law recognizes as duty § 1
2. § 17 Bargain: contract requires Bargain with manifestation of mutual assent
to exchange and a consideration § 17
a. Bargain under § 82-94 or special rules
b. Except other rules which apply
UCC
1. § 1-103:
a. UCC literally construed to promote underlying principles
i. simplify, clarify modernize, governing commercial
transactions
ii. permit continued expansion of commercial practices through
custom, usage and agreement of parties
iii. make uniform the law
b. supplement with other principles
2. § 1-201
a. (3): “agreement” as distinguished from “contract” means the bargain
of the parties in fact
i. in language or inferred from other cirumstances including
1. performance
2. course of dealing
3. usage of trade in section 1-303
b. (12) “contract” total legal obligation that results from the parties
agreement
Good: things that are movable that aren’t money or securities
Notes
1. UCC: Sale of Goods
2. CISG: Transactions between business international agreement over parties both
accepting CISG
3. Common Law: the rest and fill in above 2
II. Enforcing Promises: Bases of Legal Obligation
A. Mutual Assent
1. Intention to be bound
Restatement
1. §20 (and § 201): Effect of Misunderstanding
1
a. mutual misunderstanding: no manifestation of mutual assent to an
exchange if parties attach materially different meanings to their
manifestations and
i. both don’t know: neither party knows/has reason to know the
meaning of other or
ii. both know: each party knows or each party has reason to know
the meaning attached by the other
b. unilateral misunderstanding: manifestations operative in accordance
with the meaning attached by one parties if
i. that party doesn’t know of any different meaning attached to
the other and other knows the meaning attached by the first or
ii. same but reason to know for each party
2. § 21: intention to be legally bound
a. don’t need real or apparent intention that promise is legally binding
b. BUT: manifestation that intention that promise is not legally binding
may prevent contract formation
3. Notes: different meanings
a. Shut down contract:
i. mutual no knowledge of others different meaning
ii. mutual know different meaning of other
b. 1 party meaning
i. as stated above, clear
CISG
1. Article 8
a. Statements/conduct of a party interpreted according to his intent
where the other party knew/could not have been unaware of intent
b. If above not applicable: statements/conduct interpreted according to
understanding of reasonable person of same kind
Notes/Cases
1. Lucy v. Zehmer
a. Buyer claims was serious, seller claims was joking
b. Here there is unilateral misunderstanding.
i. The buyer took the contract to be serious: seller had reason to
know this
ii. The seller was joking, but buyer didn’t know/have reason to
know
iii. So Buyers interpretation taken
c. Objective Standard: Actual mental agreement is irrelevant
2. Objective Standard: what reasonable person would understand
3. Common Law: modified objective approach
a. Generally: objective
b. Unless agree on subjective intent even if haven’t said it or written
c. 4 principles
i. rejects subjective approach
2
1. parties words/conduct interpreted as reasonable
person would
ii. subjective states of mind can still prevent formation
1. restatement 20: neither party knew of different
meaning or both parties knew (nobody/both at fault)
iii. subjective states of mind can impose 1 parties meaning on
another
1. not equally at fault: apply ignorant party’s meaning if
other party knew/had reason to know ignorant party’s
meaning
iv. subjective meaning can impose neutral understanding
1. subjective meaning the same even if reasonable person
would find different understanding
d. Consequence: can have obligation you never knew (unilateral mistake
but other party didn’t know/have reason to know) apply objective
understanding
4. Ray v. William G Eurice & Bros
a. Take objective approach: duty to read contract
i. Even if P didn’t think they were agreeing to certain terms, they
have a duty to read the contract, signed it. Objective person
would understand what was in it
5. Contract: must have reasonable means of determining breach and remedy
a. Will include quantity
2. Offer and Acceptance: Bilateral Contracts
Offer
Restatement
1. § 22: Mode of Assent: Offer and acceptance
a. manifestation of mutual assent usually offer by one and acceptance by
other party
b. offer/acceptance can be manifest even though neither can be IDed or
moment of formation cannot be determined
2. § 24: Offer: manifestation of willingness to enter into a bargain made to
justify another in understanding that his assent to that bargain is invited and
concludes it
3. § 26: Preliminary negotiations: manifestation of willingness to enter bargain
not an offer if receiver knows/has reason to know offerer does not intent to
conclude bargain until he has made further manifestation of intent—this is
basically an invitation to bargain more
4. § 33: Certainty:
a. intention of being offer cannot be accepted to form contract until
terms reasonably certain
b. certain=provide basis for determining
i. the existence of a breach and
3
ii. giving remedy
c. terms left open or uncertain may show intention is not to be
understood as an offer or an acceptance
5. § 40: time when rejection/counter offer terminates power of acceptance
a. rejection/counter-offer by mail or telegram: doesn’t terminate power
of acceptance until received
b. but letter/telegram of acceptance sent after is only acceptance if
received before the rejection: otherwise it’s counteroffer
i. Clarified: (so no mailbox rule if first send out rejection)
6. §42 Revocation from offeror received by offeree
a. power of acceptance terminated when offeree receives manifestation
of intent not to enter proposed offer
7. § 63: when acceptance takes effect: unless offer says otherwise: Mailbox Rule
a. acceptance in manner invited by offer is operative (is
acceptance/mutual assent) as soon as it’s out of offeree’s possession
regardless of if it reaches offeror BUT
b. But: acceptance under option contract is not operative until received
8. § 65: Reasonableness of medium of acceptance
a. (unless circumstances known to offeree indicate otherwise) medium
of acceptance is reasonable if one used by offeror or
b. customary in similar transactiosn at time/place offer is received
9. § 66: acceptance properly dispatched
a. acceptance not operative when dispatched unless properly addressed
and other precautions taken as are ordinarily observed to insure safe
transmission of similar messages
10. § 68 What constitutes receipt of revocation, rejection, or acceptance
a. when comes into possession of the person addressed OR
b. into possession of person authorized by him to receive it OR
c. when deposited in some place which he has authorized as the place
similar communications be deposited for him
CISG
1. 16(1): offer may be revoked if the revocation reaches offeree before he
dispatches an acceptance
2. 18(2): acceptance effective when reaches the offeror
a. not effective if does not reach offeror in time fixed or (when no time
fixed) within reasonable time
i. take into account circumstances of transaction, including
means of communication by offeror
b. oral offer must be accepted immediately unless circumstances
indicate otherwise
Notes/Cases
1. Lonergan v. Scolnick
a. There was never an offer, so no power of acceptance, was only
preliminary negotiations
b. “This is form letter” usually means not an intention to be bound
2. Offer: generally to a specific person, so ads not usually good.
4
3. Acceptance: can just put in terms saying acceptance only good when received
to protect oneself
4. In person/over the phone communication: acceptance is good when received
(so not good if dropped phone or something)
5. Izadi v. Machado (gus) Ford
a. Ad not usually an offer
b. but court being hard on Machado because it was a bait and switch
6. Leftiwitz Case: first come first serve ad: is an offer if first to come
7. Offer: intention to be bound, reasonably certain terms (breach and remedy,
probably quantity), at specific or specific group
Revocation and Acceptance
Restatement
1. § 36: Methods of termination of Power of Acceptance
a. rejection or counter offer or
b. laps of time or
c. revocation by the offeror or
d. death/incapacity of the offeror or offeree
e. nonoccurrence of any condition of acceptance under the offer
2. § 38: rejection
a. power of acceptance terminated by rejection unless otherwise
manifested by contrary intention of offeror
b. manifestation of intention not to accept an offer is rejection unless
offeree manifests intention to take it under further advisement
3. § 39: counter offers
a. offer made by offeree relating to the same matter and propsing
substituted bargain differing from original offer
b. terminates power of acceptance unless offeror manifested a contrary
intention or counter-offer manifests contrary intention
4. § 43 indirect communication of revocation
a. power of acceptance terminated when offeror takes definite action
inconsistent with intention to enter proposed contract and offeree
acquires reliable information to that effect
5. § 50: acceptance of offer defined; acceptance by performance; acceptance by
promise
a. acceptance=manifestation of assent to terms made by offeree in
manner invited or required by offer
b. acceptance by performance requires at least one part of what offer
requests performed or tendered and includes acceptance by
performance which operates as a return promise
c. acceptance by promise requires offeree complete every act essential
to making of the promise
6. § 58: necessity of acceptance complying with terms of offer
a. an acceptance must comply with requirements of offer as to the
promise made or performance rendered
5
7. § 59 Purported acceptance which adds qualifications
a. reply to offer which purports to accept it but is conditional on
offeror’s consent to additional terms or different terms is a counter
offer
8. § 60: acceptance of offer which states place, time, or manner of acceptance
a. if an offer states place, time, or manner of acceptance in terms then
terms must be complied with in order to create a contract. If merely
suggests these things, another method is not precluded
9. § 69: acceptance by Silence or Exercise of Dominon
a. where offeree doesn’t reply, acceptance by silence or inaction is
acceptance only when
i. offeree takes the benefit of offered services with reasonable
opportunity to reject them and reason to know they were
offered with expectation of compensation (like guy building
wall in your yard)
ii. where offeror has stated or given offeree reason to understand
that assent may be manifested by silence/inaction and offeree
in remaining silent and inactive intends to accept offer
(subjective)
iii. where because of previous dealings or otherwise, reasonable
that offeree should notify offeror if he does not intend to accept
(like continuing business stuff)
b. offeree who acts inconsistent with offeror’s ownership of offered
property is bound in accordance with offered terms unless they are
unreasonable.
i. BUT: if act is wrongful against the offeror (like inconsistent
with terms), its an acceptance only if ratified by him
Notes/Cases
1. Normile v, miller: Offeror took definite action against offer and offeree had
reliable knowledge of it, so offer revoked
2. Restatement 59 clarification: adding tentative condition later, don’t
undermine acceptance. Like asking could we add something? Would you like
fries with that? Bc not conditioning his acceptance on it
3. Mirror image rule: acceptance must mirror offer: if changes it, then there is
rejection and counteroffer
a. Once rejected power of acceptance gone: but can frame answer to
keep offer on the table
3. Offer and acceptance: unilateral Contracts
Restatement
1. § 30: Form of acceptance invited
a. an offer may invite/require acceptance by made by affirmative
answer in words or by performing/refraining from specified act
i. OR: may empower the offeree to make selection of terms in his
acceptance
6
b. Unless otherwise indicated by language/circumstances: an offer
invites acceptance in any manner/medium reasonable in
circumstances
2. § 32: Invitation of Promise or Performance
a. in case of doubt an offer is interpreted as inviting acceptance by either
promising to perform or by rendering performance, as offeree
chooses
3. § 45: option contract created by part performance or tender (no promise
invited)
a. where offer invites acceptance by performance and not promise, an
option contract is created when the offeree tenders or begins the
invited performance or tenders a beginning of it
b. the offeror’s duty of performance under any option contract is
conditional on completion or tender of the invited performance in
accordance with terms of offer
4. § 62: effect of performance by offeree where offer invites either performance
or promise (the choice)
a. the tender or beginning of the invited performance or a tender of the
beginning of it is an acceptance by performance
b. such acceptance operates as a promise to render complete
performance: NOTES: this creates option, it’s held open
i. but liable then if don’t complete
ii. creates bilateral
notes/cases
1. Patterson v. Pattberg: lender said knock off money if pay in full by date, then
revoked on the date before lendee tendered the payment, so properly
withdrew
a. But, only thing preventing performance was rejection of offer
i. This is still good, didn’t have performance
ii. Didn’t have full performance, just offer to make the payment
iii. Money wasn’t tendered—because wasn’t shown before
revocation
b. This is under old Brooklyn bridge law, maybe different under new
rule because began act, or tendered beginning of it
i. But even under modern doctrine, probably just mere
preparation, not beginning performance
2. § 62: performance under ambigious contract (invites promise or
performance as acceptance): the beginning of performance is an acceptane of
performance
a. operates as a promise—creates an option (held open)
b. but then cant stop once begin performance
c. liable for contract damages if don’t complete
3. Cook v. Coldwell: employer offered bonus for certain amount of sales but
then later added condition that still had to be employed there
a. Unilateral bc employer not asking for promise to make sales
7
b. Before revoked, there was performance: reached the threshold of
bonus (§ 45)
i. Had substantially started performance: reached the highest
threshold, so ability to revoke gone
4. Postponed Bargaining: “the agreement to agree”
Restatement
1. § 27 Existance of contract where written memorial is contemplated
a. manifestations of assent sufficient to form contract are not prevented
from doing so by fact that parties also manifest an intention to
prepare and adopt a written memorial thereof,
i. BUT: circumstances may show that agreements are
preliminary negotiations
UCC
2. § 2-305:
a. parties (if so intend) can conclude contract for sale even though price
is not settled. Price is a reasonable price at the time for delivery if
i. nothing is said of price or
ii. price is left to be agreed by the parties and they fail to agree or
iii. the price is to be fixed in terms of some agreed market or other
standard as set or recorded by third person or agency and it is
not set or recorded
iv. BASICALLY: COURT WOULD FIX PRICE
b. price to be fixed by seller or buyer must be fixed in good faith
c. when price left to be fixed not by agreement of the parties fails to be
fixed through fault of one party,
i. the other may at his option treat the contract as canceled or
ii. fix a reasonable price
d. where the parties intend not to be bound unless price be fixed or
agreed and it is not agreed there is no contract
i. the buyer must return goods already received or
ii. if unable, must pay reasonable value at time of delivery and
1. seller must return any portion of the price paid on
account
3. § 2-204 (3)
a. even if term(s) are left open, contract for sale doesn’t fail if parties
intended to make a contract and there is reasonable certain basis for
giving appropriate remedy
Notes/Cases
1. Walker v. Keith: court refused to enforce extension of lease because
provision for setting rent was indefinite and ambiguous
a. Rule: must set amount or clear method to determine: here just said
market value—but not specific enough
b. Probably a lazy court: they would fix price
8
2. Test taking: say like Walker or differentiate: there was way to determine
price, but not very definite: court doesn’t want to be arbitrator
3. Longer term relationships: courts more likely to enforece
4. Quake Construction v. American Airlines:
a. P informed got bid over the phone,
b. Letter of intent set, but said right to cancel if parties failed to agree
i. Agreement to negotiate
ii. But also hint of seriousness
c. Letter said formal contract will come: evidence it’s not contract now
d. After a couple meetings, D told P they weren’t contractor
e. Holding: letter ambiguous, so parol evidence allowed
i. Right to cancel still meant had to negotiate in good faith
ii. To apply: intended to have binding agreement even though not
all filled out
f. Rule: if writing ambiguous, look at intent of parties, if unambiguous,
just look at writing
B. Consideration
1. Defining Consideration
Restatement
1. § 71: Requirement of exchange, types of exchange
a. to constitute consideration, a performance or a return promise must
be bargained for
b. a performance or return promise is bargained for if it is sought by the
promisor in exchange for his promise and is given by promisee in
exchange for that promise
c. The performance may consist of
i. An act other than a promise
ii. A forbearance
iii. The creation, modification, or destruction of a legal relation
iv. The performance or return promise may be given to the
promisor or to some other person. It may be given by the
promisee or by some other person
2. § 79: Adequacy of consideration; mutuality of obligation
a. if the requirement of consideration is met, there is no additional
requirement of
i. gain/advantage/benefit to promisor or
loss/disadvantage/detriment to promisee or
ii. equivalence in the values or
iii. “mutuality of obligation”
notes/cases
1. Hamer v. Sidway
9
2.
3.
4.
5.
a. Nephew didn’t drink for amount of time in exchange for money from
uncle, uncle held on to it, now dead
i. Court upheld contract: benefit/detriment test: detriment to
nephew for giving up legal right
Benefit/detriment test (traditional approach): consideration is benefit to
promisor or detriment to promisee
a. Usually more concerned about detriment, bc too easy to make up
benefit
b. Keep in mind who’s promise you are trying to enforce, who is
promisor in the case and who is promisee of enforcement
PA supply Inc v. American Ash Recycling Corp of PA:
a. PA disposed of American Ash’s hazardous material but it wasn’t good
b. PA needed to remove it, sue bc by giving it there was implied promise
that the material wasn’t defective
i. Consideration: benefit to American Ash: take it off their hands
1. Detriment: taking title of hazardous material
ii. Bargain required: structure of bargain there, don’t need
bargaining process
iii. Implied warranties were breached
Gifts that benefit the giver (promisor) are treated as consideration rather
than gift
Bargained for exchange: (modern approach): sought for and given
a. Can still use benefit/detriment as kind of test: to prevent from being
too abstract
2. Applying the Consideration Doctrine
Restatement
1. § 73 Performance of Legal Duty
a. performance of legal duty owed to promisor (which is neither
doubtful nor the subject of honest dispute) is not consideration
b. BUT: similar performance is consideration if it differs from what was
required by the duty in a way that reflects more than a pretense of a
bargain
2. § 77 Illusory and Alternative Promises
a. a promise or apparent promise is not consideration if by its terms the
promisor or purported promisor reserves a choice of alternative
performances unless
i. each alternative would have been consideration if it alone had
been bargained for OR
ii. one of the alternative performance would have been
consideration and there is/it appears to parties to be a
substantial possibility that before the promisor exercises his
choice, events may eliminate the alternatives which would not
have been consideration
10
3. § 79 (B) if the requirement of consideration is met, there is no additional
requirement of : equivalence in the values exchanged
a. basically mere inadequacy of consideration doesn’t void it
4. § 81: Consideration as motive or inducing cause
a. the fact that what is bargained for does not itself induce the making of
a promise does not prevent it from being consideration for a promise
b. the fact that a promise does not itself induce performance or return
promise does not prevent the performance or return promise from
being consideration for the promise
5. § 87: option contract
a. an offer is binding as an option contract if
i. is in writing, signed by offeror, recites a purported
consideration for making the offer, and proposes exchange on
fair terms within a reasonable time
ii. is made irrevocable by statute
b. An offer which offeror should reasonably expect to induce action or
forbearance of a substantial character on the part of the offeree before
acceptance and which does induce such action or forbearance is
binding as an option contract to extent to avoid injustice (not
?PROMISSORY ESTOPPEL, bc creates contract)
6. § 63: mailbox rule doesn’t apply to option contract: acceptance is when
received
Notes/Cases
1. Dougherty v. Salt
a. Aunt offered future gift: for value received
i. But the only value was warm glow: doesn’t count, no value
received—Sham Consideration: really isn’t truly bargained
for: for being a good boy: too vague, not tangible, reporting fact
doesn’t suffice (past consideration)
b. Ways around: put in trust, say in exchange for: list conditions (make
em easy); put in will
2. Sham consideration: trying to get around consideration by making it look
like contract. Not good consideration
a. By labeling or reciting consideration
b. Examples: Pretense of bargain; false recital of consideration; nominal
consideration
3. Also not consideration
a. Past consideration
b. Preexisting duty
c. Illusory promise: one where promisor has no obligation to keep
i. Promise must be real and unconditional
ii. But courts fill in implied-in-fact and implied-in law terms to
make consideration good
4. BUT: Restatement 234: avoidance of contract (at time made) containing
unconscionable term.
11
5.
6.
7.
8.
9.
a. Comment C: gross disparity in values exchanged may be sufficient
ground for denying specific performance
i. But you gotta look at circumstances I’m guessing
b. Inadequacy is INDICATOR it’s a sham consideration
c. Look for party’s intention: inadequacy as indicator
Batsakis (lender) v. Demotsis (borrower)
a. Lender gave equivalent of $25 in greek money in exchange for $2,000
later
b. RULE: Inadequacy of consideration doesn’t void contract
i. Only where consideration has no value
c. If court wouldn’t enforce: lender would never have given the money
d. Look at intentions: lendee really trying to get greek money, Lender
really trying to get money later
Plowman v. Indian Refining Co
a. Rule: past services are not consideration to provide continuing
payments
b. Facts: fired employees given half pay for services rendered
i. Must pick up checks: not consideration (not bargained for),
just was condition. Really no detriment to employees bc didn’t
have to go in
Bilateral contracts: usually the consideration for the promise is the other
promise
To keep option Open Hypotheticals
a. S: “you have one week to make decision”-can revoke, no consideration
i. Buyer gives $10—binding: $10 is the consideration to keep
open
ii. Buyer promises to give money—yes, the promise is
consideration
iii. Buyer offers services—yes, services are consideration, even if
third party
Marshell Durbin Food Corp v Baker
a. Basically deal between Baker and Durbin: promise that each can walk
away at any time: company could fire
i. But if triggered event, get 5 years pay in exchange for staying
on until then
ii. Stayed on until triggered event
iii. Promise remained as long as employed: so not illusory, just
contingent
1. Basically Baker staying on in company was
consideration: unilateral contract
C. Contract Formation Under Article 2 of the UCC
1. Mutual Assent Under the UCC
UCC
12
1. 1-201
a. (3) Agreement: bargain of parties in fact as found in language or
implication from other circumstances including
1. course of dealing or
2. usage of trade or
3. course of performance as provided in this act
ii. whether agreement has legal consequences is determined by
provisions of this act otherwise law of contracts
b. (11): contract: total legal obligation which results from the parties’
agreement as affected by this act and other rules
2. 2-102: Scope; certain security and other transactions excluded from this
article
a. unless context otherwise requires: article 2 only applies to
transactions in goods
i. does not apply to any transaction which (although in the form
of an unconditional contract to sell or present sale) is intended
to operate only as a security transaction
ii. nor does this article impair or repeal any statute regulating
sale to consumers, farmers or other specified classes of buyers
3. 2-104
a. 1. Merchant:
i. person who deals in goods of the kind or otherwise by
occupation who
ii. holds self out as having knowledge or skill peculiar to the
practices/goods involved in the transaction or
iii. whom such knowledge or skill may be attributed by his
employment of an agent or broker or other intermediary who
by his occupation holds self out as having such knowledge or
skill
b. 2. Financial agency:
i. basically deals between parties and makes
advances/purchases credit/makes arrangements/takes money
for others/intervenes between buyer and seller
c. 3. Between merchants:
i. in any transaction with respect to which both parties are
chargeable with knowledge or skill of merchants
4. 2-105(1): goods
a. all things which are movable at the time of identification to the
contract for sale other than
i. the money in which the price is to be paid
ii. investment securities and things in action
b. includes unborn young animals and growing crops and other
identified things attached to realty as described in the section on
goods to be severed from realty (2-107)
5. 2-204: formation in general
13
a. 1. Manner: Contract 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 contract
b. 2. Sufficient Moment: An agreement sufficient to constitute a contract
for sale may be found even though the moment of its making is
undetermined
c. 3. Indefiniteness: Even if some terms left open, contract does not fail
for indefiniteness if parties intended to make contract and there is
reasonable certain basis for giving an appropriate remedy
6. 2-206 Offer and acceptance in formation of contract
a. 1. unless otherwise indicated by language/circumstances
i. an offer: invites acceptance in any manner and medium
reasonable in the circumstances
ii. offer to buy for prompt/current shipment: invites acceptance
either
1. by prompt promise to ship or
2. prompt/current shipment of conforming/nonconforming goods
a. BUT: non conforming goods doesn’t constitute
acceptance if seller seasonably notifies the buyer
that the shipment is offered only as an
accommodation to buyer
b. 2. Where the beginning of a requested performance is reasonable
acceptance an offeror who is not notified of acceptance within
reasonable time may treat the offer as having lapsed before
acceptance
CISG
1. 1.
a. 1. Applies: sale of goods; parties place of business is different states
i. when states are contracting states or
ii. when rules of private international law lead to application of
the law of a contracting state
b. 2. Fact of business in different states disregarded when this fact does
not appear either
1. from the contract or
2. from any dealings between or
3. from information disclosed by
ii. the parties before or at the conclusion of contract
c. 3. Neither nationality of parties/civil or commercial character of the
parties/of the contract: is to be taken into consideration in
determining the application of this convention
2. 14.
a. 1. Proposal to specific persons=offer: if definite and indicates
intention to be bound by acceptance. Definite=
i. goods
14
ii. exrpressly or implicitly fixes/makes provision to set quantity
and price
b. 2. Proposal not addressed to specific persons is invitation to make
offer unless clearly indicated by proposer
3. 15. Offer
a. valid when reaches the offeree
b. an offer, even if irrevocable, may be withdrawn if the withdrawel
reaches offeree before or at same time as the offer
4. 18(1). Statement/conduct of offeree indicating assent is acceptance. Silence
or inactivity not
Notes/Cases
1. Jannusch v Naffziger
a. Facts: bought food truck and business
b. UCC Applies: mostly over the truck
i. Acceptance by mutual conduct that there was an offer and an
acceptance
c. Contract sufficient: 2:204(3): had way of giving remedy, $150,000
2. Transfer and retaining goods for long period indicator of intention of
contract
3. EC Styberg Engineering (s) v. Eaton Corp (b)
a. 1st letter: not acceptance bc previous Price quotes aren’t offers; if
letter was offer, continuation to negotiate negates and makes another
counteroffer
b. 2nd conversation: evidence was never acceptance
c. 3rd: ordered some units (conduct indicating acceptance) but not all
units, if have done that would be new purchase order (by prior
conduce)
4. Harlow & Jones v. Advance Steel Co
a. S sent form, not returned. B sent form, not returned (only minor
adjustments)
i. S said not liable for late bc of acts beyond their control, B form
says can reject if late
b. Steel shipped late through no fault of seller
c. Court: UCC: 2:204: contract by oral agreement earlier
i. There was no material delay, steel arrived when it would have
anyway
5. UCC: welcoming approach to formation 2:204: not all terms or when formed
a. 2:206: can accept by variety of means
2. Irrevocability by Statute: the firm offer
UCC
1. 2-205: Firm offers
15
a. An offer by a merchant (to buy/sell), in signed writing, which by
terms gives assurance it will be held open: is not revocable for lack of
consideration
i. During time states
ii. Or if no time: reasonable time
iii. BUT: irrevocability wont exceed 3 months (conservative
approach, even if time stated max 3 months)
b. Terms of assurance on form from offeree must be signed by offeror
2. 2-104
a. (1): merchant
b. (3): between merchants
3. 1-201
a. (37): security interest: interest in personal property which secures
payment or performance as obligation
b. (43): unauthorized signature or endorsement: made without actual,
implied or apparent authority and includes a forgery
4.
CISG
1. 16(2) Offer cannot be revoked
a. if it indicates, whether by stating fixed time for acceptance or
otherwise, that it is irrevocable or
b. if it is reasonable for offeree to rely on the offer as being irrevocable
and offeree has acted in reliance on the offer
Restatement
2. 87(1)(a)(minority) option contract: an offer is binding as option if
a. (a) in writing and signed by offeror, recites purported consideration
for making of the offer, proposes an exchange on fair terms within
reasonable time or (b) is made irrevocable by statute.
Notes/Cases
3. 2:205: irrevocable offers but only for merchants. Must be signed
a. common law can still apply: so if consideration then no 3 month max
4. restatement 63(b). mailbox rule doesn’t apply to option contracts: bc offeree
doesn’t need that advantage
5. Problem 2-5
a. Consideration: bank knew offeree gathering investers, but not what
bank was bargaining for, so detriment but not bargained for exchange
i. No consideration
3. Qualified Acceptance: the “battle of the Forms”
Classical Principles
Notes/Cases
1. Princess Cruises, Inc v. General Electric Co
16
a.
Forms sent back and forth, GE rejected purchase form, denies
warrenty of Princess cruise form. Only liable to contract price
b. Princess pays GE price, allows to continue. Bad repairs, cruise
cancelled, millions in damages
c. Appeals: common law, primarily for services, (coakley test)
i. language emphasizes services,
ii. nature of busness,
iii. intrinsic value
iv. and (non coakley): dispute out of bad services
d. Mirror Image Rule: if acceptance not mirror image of offer, it’s
counter offer: GE had rejected Princess terms and used own
e. Last Shot Rule: acceptance in offeree’s action, last party that sends
form before beginning performance controls terms
2. Commercial transactions, often through premade forms to control authority
throughout company
a. Binds own agents
b. But might not capture agreement completely, and everyone has own
form
i. Like buyer makes offer through own form, seller accepts
through own form
ii. Will agree on some aspects, but not all
iii. Parties then act like they have agreement
Battle of the Forms
UCC
1. 2:207
a. 1. A definite and seasonable expression of acceptance or written
confirmation which is sent within a reasonable time operates as an
acceptance even though it states terms additional to or different from
those offered or agreed upon,
i. UNLESS: acceptance is expressly made conditional on assent to
the additional or different terms
b. 2. Additional terms are proposals for addition to the contract
i. Between merchants such terms become part of the contract
unless
1. The offer expressly limits acceptance to the terms of
offer or
2. They materially alter the offer or
3. Notification of objection to them has already been given
or is given within reasonable time after notice of them
is received
c. 3. Conduct establishing contract: Conduct by both parties recognizing
existence of contract is sufficient to establish contract for sale
although the writings of parties do not otherwise establish a contract.
17
i. In such case terms of particular contract consist of those terms
on which the writings of the parties agree,
1. Together with any supplementary terms incorporated
under other provisions of the UCC (don’t know these
yet)
2. Comments to 2:207
a. Non material alterations: setting forth or enlarging seller’s exemption
due to supervening causes beyond his control, reasonable time for
complaints
b. Materialy alter: surprise/hardship if incorporated without express
awareness: negating standard warrenties, gaurenty of 90%/100%
deliveries in canneries (where there are quantity leeways, right to
cancel upon buyers failure to meet invoice, complaints in shorter time
than usual
Notes/cases
1. 2:207 changes the mirror image rule
a. 2:207(1): acceptance even though different/additional terms than
those offered/agreed. Unless acceptance expressly conditional on
those
i. BUT: must be definite and seasonable assent to offer (clearly
accepting)
b. Ex. offer to sell for $100, respond, ill buy for $50, not acceptance bc
didn’t assent to offer
c. Ex 2: I accept, expect delivery upon check received: additional
term=acceptance still
d. Ex 3: I accept, expect delivery upon check received but conditional on
1 day delivery: not acceptance, requires acceptance of further term
e. Ex 4. Already have a deal, then written confirmation with additional
terms, still acceptance, additional terms subject to rest of 2:207
2. After have acceptance (so old terms form contract), move to 2:207 (2):
proposals of additions. Automoatically applied only between merchants
a. If merchants: additional terms become part of contract by default
unless…
i. Offer expressly limits terms ahead of time (acceptance means
assent to these terms)
ii. The new terms materially alter the offer
iii. Notification of objection to them has already been given or
given within reasonable time after notice received
3. 3 approaches to handling different rather than additional terms
a. inclusive approach: different=additional. BUT: different terms will
usually materially alter it
b. Categorical Exclusion: different terms do not become part of contract
(not in language of (2), only additional terms)
c. Knockout approach: different terms (conflicting) knock each other out
of contract
18
4.
5.
6.
7.
8.
d. Consequence: inclusive/categorical is basically first shot rule,
knockout both go out.
2:207(3): when parties proceeding without agreement. Basically there are
contradicting terms but proceed as if had contract
a. But conduct can show have contract: terms of contract are those in
which parties agree and gap fillers by other terms of UCC
b. Contradicting terms are knocked out
Acceptance of delivery does not mean last shot applied, just apply agreed
terms and gap fillers: 2:207(3): UCC getting away from last shot
a. So under UCC: be wary of bringing in terms through consent
Brow Machine v. Hercules
a. Facts
i. S: Price quote sent: not an offer, and expired anyway
ii. B: Purchase order sent: stated acceptance conditional on these
terms: OFFER
iii. S: Seller returned form: new specifications (indemnity clause,
but not made conditional in acceptance), if problem tell in 7
days: acceptance: acceptance
iv. B: fixed a problem
b. Indemnity clause not part of contract:
i. bc offer expressly limited terms of acceptance,
ii. and acceptance wasn’t conditional on indemnity clause
c. Material Changes: (under hypo 2:207(2) doesn’t apply), proposal of
additional term (at least for material terms), needs express assent, so
wouldn’t be part of contract
i. Reluctance to say implicit consent by conduct, especially if
already had objected to additional terms (as here)
Paul Gottlieb v. Alps South Co
a. Seller’s Acceptance included clause limiting liability
b. Issue: is it included—basically does this materially alter the contract?
i. Court says no: burden on party attempting to exclude
ii. Surprise or hardship test: material alterations result in
surprise or hardship if incorporated without express
awareness: Then need
a. like getting rid of warranties, cancelation
abilities, etc
2. not surprising or hardship: adding standard shit,
interest rate, normal time to complain, etc
c. court: no surprise for Buyer: duty to read
d. also hardship for seller: couldn’t foresee damages, not unreasonable
Material Alterations: must be expressly assented to
a. Qualifies as material alterations
i. Changing warranty, ability to cancel, things outside of normal
practice (comments 4/5)
ii. Not material altercation: exemption due to things beyond
control (Europe Steel Case)
19
b. Point of contention: dispure resolution clauses
c. TEST HINT: going to be ambiguity if material change here, go both
ways
9. On Test: proposing own terms is different than saying qualified acceptance
(2:207 1): diagnose if expressly conditional: then proceed assuming they are
additional to 2:207(2), don’t just end with not acceptance
10. Surprise or hardship test: for if material change
a. Surprise: term party wouldn’t expect to be part of contract?
1. Base on industry standards/former dealings
ii. Arbitration: parties usually arbitrate: no surprise or hardship
iii. Look to facts and analyze if surprise or hardship (often is)
CISG
Cisg
1. 19:
a. 1. A reply to an offer which purports to be an acceptance but contains
additions, limitations or other modifications is a rejection and counter
offer (mirror image rule like)
b. 2. However, reply purporting to be acceptance that contains
i. additional or different terms which DO NOT MATERIALLY alter
the terms of the offer constitutes an acceptance
1. UNLESS: the offeror, without undue delay, objects orally
to the discrepancy or dispatches a notice to that effect
ii. If he does not so object: contract are the terms of the offer with
the modifications contained in acceptance
c. 3. Material altercations: additional or different terms relating to
i. Price
ii. Payment
iii. Quality/quantity of goods
iv. Place/time of delivery
v. Extend of one party’s liability
vi. Settlement of disputes
vii. “among other things”
2. 18(1): statement by or other conduct of the offeree indicating assent to an
offer is an acceptance. Silence or inactivity does not in itself amount to
acceptance
3. 8(3): determing intent of party or understanding reasonable person would
have: due consideration given to all relevant circumstances of case including
a. negotiation
b. practices which parties have established between themselves
c. usages and any subsequent conduct of the parties
Notes Cases
1. UCC vs CISG:
a. CISG: material additions means no acceptance but counteroffer
20
b. UCC: material additions just excluded, acceptance still good
2. Filanto v. Chilewich
a. Conduct made silence an acceptance: duty to speak
i. Offeree who knowing offeror has condensed performances
fails to notify them of objection within reasonable time
will sometimes be deemed to have assented to those terms
b. Material change: arbitration
i. Was rejected originally, reintroduced, and then buyer referred
to part they had rejected earlier, so that rejection wasn’t clear
anymore (doesn’t matter as much under CISG)
3. Chateau Des Charmes Wines v. Sebate USA
a. B (P), and seller (S) (D) made deal over the phone
b. Included on invoice was clause: all disputes settled in france
i. This is settlement of dispute CISG 19(3), so material change
1. Maybe accepted by conduct
2. But already had agreement (so not accepting
counteroffer), just operating in terms of previous
agreement
ii. Inconsistent with Filanto: difference is already formed
contract, in Filanto still talking about terms in conduct
D. Electronic and “Layered” Contracting
Notes/Cases
1. Shrink Wrap
a. Purchase by phone/online but don’t have specific terms
i. Then discover terms in greater detail when good received
ii. Learn these when remove plastic wrapping
iii. Terms provide that if you keep for long enough, means
acceptance
1. BUT: can return
b. Happens a lot with insurance policies: inconceivable to look at whole
contract
2. Click Wrap:
a. Hit button saying “I agree”
b. Terms usually more obvious
c. You’re stuck with them once click it
3. Browse Wrap
a. Browse through site for information then absorb the terms by
browsing, but don’t need to click button
4. Hint: look for when acceptance occurs
5. Hines v. Overstock
a. Fight over mediation/forum terms
b. Browsewrap not always bad: if reasonable person would encounter
terms: provides actual or constructive knowledge of terms before
entering
c. Court says: need prompt review of terms and prominent display
21
d. Here: no actual or constructive knowledge of terms
i. Terms available at bottom of page is not assent
1. Court: need prompt review of terms and prominent
display
e. So terms of mediation/forum not included
6. Survey on adequate notice for browsewrap
a. Adequate notice of the existence of the proposed terms
b. Meaningful opportunity to review the terms
c. Adequate notice that taking a specified action manifests assent
d. The user takes the specified action
7. Courts: often more favorable to individual buyers than companies taking
information from cite repetitively
8. Below is on shrinkwrap
9. DeFontes v. Dell
a. Issue over arbitration term: shrink wrap
b. Layering/Rolling approach: vendor is the offeror, proposes
transaction: offer by shipping
c. Application: Here, too many steps for buyer to know know could
reject by sending back
d. Therefore: terms not included in contract
i. BC not clear could reject terms by returning the goods or that
acceptance means acceptance to all terms
ii. Burden is on vender
10. Easterbrook (layered/rolling) approach (majority)
a. Vender: master of the offer
i. Offer: when products received by buyer
1. Terms appear when shipment made: offer is when
product received
2. Acceptance: when buyer keeps the item for time period
specified
ii. PRECONDITION: terms must state period of time to deem
acceptance or return for rejection
1. Bc seller as master of offer: sets reasonable mode of
acceptance
2. By keeping the product, assent to other terms as well
iii. It must be reasonably clear that accepting all terms by
keeping the product, and can reject by returning
b. Seller: must demonstrate actual acceptance: burden to show made
clear
11. Kloceck Approach
a. Offer: is when buyer submits order (like other UCC cases)
b. Acceptance: when seller accepts the payment or ships or promises to
ship
c. Terms: proposals for additions
i. Under 2:207: 2: offerer (buyer and nonmerchant) these terms
don’t become part of contract unless accepted
22
ii. If merchants: material changes aren’t included unless agreed to
1. NOT INCLUDED TERMS SIMPLY IF CONSUMER
RETAINS
d. Under this: sellers argue: shrink wrap terms are counteroffer: but
under UCC need to say acceptance expressly conditional on these
terms
12. Go through transaction to see when offer/when acceptance/what happens.
Then by party and what they would argue
13. Material terms with non merchant: less likely that behavior is acceptance:
14. Test hint: subpart C of question won’t just repeat all of subpart B: there will
be some difference
III: Liability in the absence of Bargained-for Exchange: Promissory Estoppel
and Restitution
A. Protection of Promisee Reliance: Promissory Estoppel
1. Promises Within the Family
Restatment
1. 90 (1):
a. A promise which the promisor should reasonably expect to induce
action or forbearance on the part of the promisee or a third person
and
b. Which does induce such action or forbearance
c. Is binding if injustice can be avoided only by enforcement of the
promise
d. The remedy granted for breach may be limited as justice requires
Notes/cases
2. Reliance instead of consideration
a. Remedy: put ppl back in position as if promise never made, never
relied upon
3. Kirskey v. Kirskey
a. Promise could live on land until family grown, landlord kicked out
b. Benefit detriment test
i. Benefit: assisted with chores/companionship
ii. Detriment: moved
c. Bargained for exchange
i. Look for if the landlord seeking to have tenant move in
exchange for promise
1. Wants labor?
d. Held: no consideration: no recovery: but before promissory estoppel
4. Harvey v. Dowe: GOOD CASE
a. Facts: Parents said give land at some point, not specific enough,
23
i. but promise was implied through action: parents helped the
daughter build
1. implied father wouldn’t take away the land
ii. reliance: $200,000 spend on house
o Take home: When substantial improvements have been done in the
context of transfer of land promise, and done with reliance on it, the
promise is enforceable
2. Charitable Subscriptions
Restatement
1. 90(2) A charitable subscription or a marriage settlement is binding under
subsection (1) without proof that the promise induced action or forbearance
Notes/Cases
1. King v. BU
a. In MA (and most jurisdicitons don’t use 90(2) need reliance or
consideration
b. Facts: MLK like bailor, BU bailee
i. Said use utmost care, BU did and indexed
ii. Also said slowly transfer and at death transfer all
iii. Can make promise enacted at death (doesn’t have to fit
will requirements)
c. Reliance: for enforcing the ownership beyond the bailee: BU indexed
in addition to care: but did MLK bargain for it? Probably not
d. Consideration: But court: said went beyond bailee relation by
indexing
i. Because went beyond bailee requirement, consideration or
reliance was good
e. Conc: jury question good for promissory estoppel
2. To establish reliance in charitable donation: show gratitude when receive gift
a. Because most jurisdictions don’t apply §90(2)
3. Promises in a Commercial Context
Notes/Cases
1. Katz v. Danny Dare
a. Facts: Katz worked for brother, hit head, convinced (through
negotiation, choice still) to retire by deal of pension (wasn’t said
you’re fired, have this)
i. Started with checks
ii. Works half days, got smaller checks
iii. Sent back: bc if accepts, could be called partial payment of debt
equitting promisor of further obligation
b. Promise: $13,000 to induce promise
c. Reliance: gave up job
24
2.
3.
4.
5.
d. Injustice: didn’t have job
e. Usually §90 focusses on detrimental reliance: Katz was better off
i. Detrimental reliance: changed position of promisee
1. Detriment could be more stress, whatever (like
promotion, given raise but not other things promised)
f. Employer: would have been fired anyway. But wasn’t fired, elected
this choice
i. Doesn’t matter if would have been fired, he wasn’t
ii. If no choice: then can be no reliance
g. Under bargained for exchange
i. There was a literal bargaining here, seems satisfies
consideration
ii. Wanted voluntary resignation, so bargained for, even if could
have just fired
View promissory estoppel/reliance: can both be articulated on same set of
facts
Using Promissory estoppel: benefit, only need reliance,, only put back in
position before promise (make up for detriment of reliance on promise). Not
if contract was fulfilled (position of if had fulfilled contract)
a. Sometimes courts go further, and award contract damages: like
promise that resulted in reliance on forgone opportunities:
i. Ex. Promise you will get job
Aceves v. US Bank
a. Facts: Bank promised to renegotiate loan to lift automatic stay on
house
b. Reliance: Aceves lifted stay, didn’t file different type of bankruptcy
c. Injustice/detriment: bank foreclosed on home, never intended to
negotiate
d. Promise must be clear and unambigious:
i. rational basis of assessment of damages: court must be able to
determine scope of duty and limits of performance:
ii. here, work with Aceves to reinstate mortgage and loan
modifications: was clear enough
e. reasonable and foreseeable reliance: Aceves did what was asked
f. detriment: lost rights under Ch 13 bankruptcy
Continued: common case: promise to work with me, didn’t seek bankruptcy,
therefore expected they would no foreclose: distinguished by not going
through motions Aceves did (filing bankruptcy, having stay, etc)
a. Aceves: bank knew there would be reliance, not just “hey lets talk
b. Court started talking about detriment instead of reliance
i. Sacrificed ability to have chapter 13 rights:
ii. This is related to how courts may assert justice: bc this was the
loss that should be made up
4. Limiting the offeror’s power to revoke: the effect of pre-acceptance reliance
25
Restatement
1. 87: Option Contract
a. 1. An offer is binding as an option contract if it
i. a. is in writing and signed by the offeror, recites a purported
consideration for the making of the offer, and proposes an
exchange on fair terms within a reasonable time or
ii. b. is made irrevocable by statute
b. 2. An offer which the offeror should reasonably expect to induce
action or forbearance of a substantial character on the part of the
offeree before acceptance and which does induce such action or
forbearance is binding as an option contract to the extant necessary to
avoid injustice (mostly for contracting contracts)
2. 90: Promise Reasonably Inducing Action or Forbearance
a. 1. A promise which the promisor should reasonably expect to induce
action or forbearance on the part of the promisee or a third person
and which does induce such action or forbearance is binding if
injustice can be avoided only by enforcement of the promise. The
remedy granted for breach may be limited as justice requires.
b. 2. A charitable subscription or a marriage settlement is binding under
subsection (1) without proof that the promise induced action or
forbearance
3. 63(b) Time when acceptance takes effect
a. an acceptance under an option contract is not operative until received
by the offeror
Notes/Cases
1. James Baird Co v. Gimbel Bros
a. Offer for subcontract (by subcontracter) had mistake, used in general
bid, told of mistake, then accepted
b. 1st Theory of binding Consideration: wasn’t a bilateral offer, up for
acceptance after the general got the bid: so using it for main bid not
what was bargained for
i. general contractor wasn’t bound, could have used others bids,
so not bilateral
nd
c. 2 theory: Promissory estoppel: Saying a promise and an offer are
different, an offer isn’t binding until consideration, this was offer not a
promise: don’t apply promissory estoppel into these catagories
d. No reason to protect businesses who don’t protect themselves:
general contractor could have formed contract ahead of time
2. Drennan v. Star: GOOD CASE for CONTRACTORS AND STUFF LIKE IT
a. Custom: general contracter receives bids on day of contract, puts in
general and reports the subcontractors: did this, then mistake found
i. General also put in bond to gaurentee they do the work if win
ii. Not contract: bc no consideration (for option), and wasn’t
accepted
26
3.
4.
5.
6.
b. Promissory estoppel: (analogy to §45: forcing unilateral to stay open)
but the performance wasn’t what was invited
i. But expected, it benefited offerer (subcontractor)
1. Otherwise would have to build in uncertainty costs
ii. Subcontractor could also have stated revocable, then reliance
unreasonabl
c. If general goes bid shopping after: no reliance, same with bid
chopping
d. Alternative: would result in purposeful under estimation, then try to
squeeze out more money from general
e. Majority: if put in bid, can’t withdraw until reasonable time to accept:
shifts powe
f. Differentiating fact: subcontractor (named) was included in the bid
Modern approach: in bidding, apply Drennen, otherwise be speculative
Berryman v. Kmoch
a. OPTION THEORY
i. Offer to sell land, drew up option contract in exchange for $10
or other consideration
1. Didn’t pay $10 but got reports/investors and such (but
this not good consideration bc not bargained for)
ii. Option contract not binding by action in reliance if action is
neither requested nor given in exchange for option promise:
this is case here
1. So no binding, option was withdrawn by action
inconsistent, and B knew about it (both required)
b. PROMISSORY ESTOPPEL THEORY
i. Reliance reasonably expected? NO: was option to buy land, not
find buyers
1. But reasonable to rely for realistate brokers to find
investors?
ii. Reliance unreasonable: change position relying on non-binding
option
1. Basically buyer should have known
c. Majority: takes this approach: (bargained for consideration or
promise reasonably relied upon), not 87(1)(a) where signed reported
consideration is enough, or
i. 87(2): not applied here as much because commercial setting,
also minority
Adequacy of consideration: not important: look for legally significant
consideration
a. Usually consideration is a promise, but it’s what’s bargained for
b. Consideration ≠ ILLUSORY PROMISE: promise that doesn’t promise
anything because not required to do it
87(2) v. § 45 and § 62:
a. 87(2): bilateral contracts: about reliance acts, not beginning
performance (what other side necessarily requested)
27
i. BUT: Berryman doesn’t apply this, it’s a minority and this is in
commercial setting
ii. Reliance acts not necessarily what other side requested
b. 45 and 62: unilateral contracts: part performance of what is asked for
7. 90 majority: about a promise with justified reliance, not an offer: 87(2)
(minority) adds reliance to an unaccepted offer as same as promise
a. 87(2): needs reliance of substantial character (more than 90), but still
minority
8. reliance: most of the time what the seller wants, BUT: if clear you will use
offer to do more, then reasonable reliance easier to find
a. in Berryman: court relied on expertise to say unreasonable
9. Pop’s Conses v. Resorts International
a. NJ requires clear and definite promise: have a deal, don’t renew lease
b. Pop’s did not renew lease, to its detriment
i. Here: promissory estoppel even though know true offer
1. When D is clear taking action in reliance
10. Test hint: careful if reliance is legal fees or storage or something they would
have anyway, needs new cost
11. Review: What makes an offer binding
a. Unilateral: beginning performance or tendering is irrevocable §45
b. Bilateral: looking only for promise: beginning performance does
nothing unless conduct that equals acceptance (take the good or
something)
c. § 62: contract that invites acceptance by performance/promise: begin
performance=acceptance
d. Traditional option contract: option supported by legally sufficient
consideration
e. 87(1): recital of purported consideration (signed in writing and pose
exchange on fair terms) minority
f. 87(1)(b): statute: UCC 2:205 and CISG equivalent
g. promissory estoppel: predicated on offer: Drennen (often limited to
bidding) or its expansion in 87(2) to whatever (minority)
h. promissory estoppel: reliance on promise or something less (series of
assurances of deal, promise) Pop’s Cones
i. Reasonability and detriment hashed out in injustice inquiry
ii. Injustice purpose: alternatives of enforcing promise (like could
have avoided the injury) or courts can put in unclean hands b.
(promissee doing something dirty)
B. Liability for Benefits Received: Restitution
1. Restitution in the Absence of a Promise
Notes/Cases
1. Credit Bureau Enterprises Inc. v. Pelo
28
a.
2.
3.
4.
5.
6.
7.
Guy committed to institution against will, hospital trying to recover,
used stuff below (116) (didn’t get implied in fact, but used restitution
under 116 in emergency situation
Implied in Law Contract: same as quasi contract or restitution or unjust
enrichment
a. Doesn’t require assent or consideration
Implied in Fact Contract: real contract, but imply assent from conduct as
well as consideration
Unjust enrichment: when one party benefits the other without acting
officiously, with an intent to charge, owe money
a. can be obligation to pay without consent
Restitution 106 (new one is 20): emergency restitution: doesn’t require
knowledge/consent if person couldn’t consent and done to prevent harm:
done unofficiously and with intent to charge
a. Expressly disconsent: irrelevant if can’t consent
Watts v. Watts
a. Facts: girl stayed at home/helped with work without pay/joint
tax/joint buying house but not married
b. Implied in Fact Contract: work and shit was good consideration,
wouldn’t have done stuff unless implied agreement to share
c. Restitution: benefit and retention would be unjust: she contributed to
increase both of their well-being, not fare to leave it all with him
Court Split: unjust enrichment: get value of contribution or increased wealth
divided
2. Promissory Restitution (Moral Obligation)
Restatement
1. 82: Promise to Pay indebtedness; effect on the statute of limitations
a. 1. If just expired by SoL, promise enforceable: A promise to pay all or
part of an antecedent contractual or quasi-contractual indebtedness
owed by the promisor is binding if the indebtedness is still
enforceable or would be except for the effect of a statute of limitation
b. following operate as a promise unless facts indicate otherwise
i. voluntary acknowledgment to obligee, admitting present
existence of the antecedent indebtedness or
ii. voluntary transfer of money, a negotiable instrument, or other
thing by obligor to obligee, made as interest on or part
payment of or collateral security for antecedent indebtedness
or
iii. statement to the oblige that the statute of limitations will not
be pleaded as a D
2. 83: Promise to Pay Indebtedness Discharged by bankruptcy
a. Promise after bankruptcy to pay anyway: express promise to pay all
or part of an indebtedness of the promisor, discharged or
29
dischargeable in bankruptcy proceddings begun before the promise is
made, is binding (
3. 86: Promise for Benefit Received
a. 1. Promise made in recognition of a benefit previously received by the
promisor from the promisee is binding to the extent necessary to
prevent injustice
b. 2. A promise is not binding under subsection (1)
i. if the promisee conferred the benefit as a gift or for other
reasons the promisor has not been unjustly enriched; or
ii. to the extent that its value is disproportionate to the benefit
Notes/Cases
1. Mills v. Wyman
a. Facts: father offered to pay for kids hospital bills
b. For enforceability: need consideration or legal obligation
i. Only when promisor gains something from promise or
promisee loses something is promise valid
ii. Moral obligation: consideration: only if consideration had
existed (bankruptcy or SoL or minor (now adult) then
acknowledging existence of debt)
2. Webb v. McGowin
a. Facts: Dude saved owners life, got hurt
b. Court: Material Benefit Rule: receives material benefit from another
other than gratuitously, subsequent promise to compensate for
rendering such benefit is enforeceable
i. Reasoning: subsequent promise is an affirmance of the
service rendered carrying presumption it was previously
requested: exception to past consideration
3. Approximation of moral obligation being enforceable promise: moral
obligation supporting promise w/o/ reliance or consideration
a. Promisor has benefited/enriched by promises sacrifice
b. Where just and reasonable claim for compensation
i. Revives prior obligation w/ consideration
ii. Promise is functional equivalent to prior request for the action
4. § 86: clarification:
a. promise in recognition of previously received by promisor to
i. relied on, reasonable reliance
b. promisee to prevent injustice
i. not if conferred as gift
ii. not if promissor not unjustly enriched (like not if promisee has
no loss, bc then promissor’s enrichment on unjust)
iii. or if value disproportionate to benefit
c. in other words: promise made by benefitor to benifee (in recognition
to that benefit)
i. but benefit from previous bargain not unjust
5. examples:
30
6.
7.
8.
9.
a. conveying services to another by mistake (and not observed so no
duty to speak): benefitor promises to pay
b. emergency where person promised to compensate: shot saving
someone
2a: promise not binding if beneficiary no unjustly enriched: like shared the
benefit with promisee already, or value disproportionate to benefit: and
value can’t be disproportionate
HINT: Look for webb: look if not gift, to pay for act done: acceptance after
indicator it wasn’t a gift: indication not gift: detriment to promisee (injury)
a. If no promise: restitution under emergency services 119 (of first
restatement) or 20 (of third)
§ 1: Third restatement : unjust enrichment, gotta share it
§ 20: professional services, done for payment, don’t need approval to have
restitution
GENERAL ADVICE:
1. make an outline
2. prioritize
3. keep going after conclusion with other side: but don’t proceed
counterfactually
4. try to commit to a better answer
IV. Statute of Frauds
A. General Principles: Scope and Application
Scope of the statute; sufficiency of the Writingl Part Performance
Restatement
A. 110 Statute of Frauds coverage
a. 1. Following no enforcement unless written memorandum or
exception
i. a. Executor-administrator provision: a contract of an
executor or administrator to answer for a duty for his decedent
1. guy goes hey, owed me $100, executor says yes: needs
written memorandum
ii. b. suretyship provision: a contract to answer for a duty of
another
iii. c. marriage provision: a contract made upon consideration of
a marriage
iv. d. land contract provision: a contract for the sale of an
interest in land
v. e. one year provision: a contract that is not to be performed
within one year of the making thereof
b. 2. The following classes of contracts, which were traditionally subject
to the statute of frauds, are now governed by statute of Frauds of UCC
31
B.
C.
D.
E.
i. a. contract for sale of goods $500 or more (§ 2-201)
ii. b. contract for sale of securities (8-319)
iii. c. . a contract for sale of personal property not otherwise
covered, to the extend of enforcement by way of action or
defense beyond $5,000 in amount or value of remed (I-206)
c. 3. UCC requires writing signed by the debtor for an agreement which
creates or provides for a security interest in personal property or
fixtures not in the possession of the secured party
d. 4. Statutes in most states provide that no acknowledgment or promise
is sufficient evidence of a new or continuing contract to take a case
out of the SoF unless made in some writing signed by the party to be
charged, but that the statute does not alter the effect of any payment
of principal or interest
e. 5. In many states, other classes of contracts are subject to a
requirement of writing
131: General Requirements of Memorandum
a. unless additional requirements are prescribed by particular statute, a
contract within SoF is enforceable if it is evidenced by any writing,
signed by or on behalf of the party to be charged, which
i. a. Reasonably ID’s subject matter of the contract
ii. b. is sufficient to indicate that a contract with respect thereto
has been made between the parties or offered by the signer to
the other party and
iii. c. states with reasonable certainty the essential terms of the
unperformed promises in the contract
132: Several Writings:
a. the memorandum may consist of several writing if one of the writings
is signed and the writings in the circumstances clearly indicate that
they relate to the same transaction
133: memorandum not made as such
a. except in the case of a writing evidencing a contract upon
consideration of marriage: the statute may be satisfied by a signed
writing not made as a memorandum of a contract
134: signature
a. the signature to a memorandum may be any symbol made or adopted
with an intention, actual or apparent, to authenticate the writing as
that of the signer
Notes/Cases
A. Generally what to look for
a. Falls in statute of Frauds
i. Still needs all other contract stuff
b. Fulfills necessity of written memorandum
c. Is there exception?
B. Clarification of §110:
a. Interest in land: leases: if more than a year, writing.
32
C.
D.
E.
F.
i. Some states, commission to realastate agent: related to land so
must be in writing
b. 1 year: absolutely last for more than one year from time of agreement
(not time of performance)
i. terms in the contract that preculude full performance within a
year
ii. clock starts at time of agreement
modifications of contract: if resulting contract as modified in SoF, then need
writing
Crabtree v. Elizabeth Arden Sales Corp: Part Performance under SoF
a. Facts: different shit signed and written down at different times
i. Pay roll change card, signed by manager: but these cards aren’t
contract: had all essential terms but time of contract
ii. Original 2 year contract making deal unsigned
iii. enough evidence to tie them all together: writing says: per
contractual arrangement between prez and P (first unsigned
doc said 2 years)
b. Rule: signed and unsigned documents read together, if they clearly
refer to same subject matter or transaction—can use oral testimony
to tie them together
Hypo: Lifetime employment: some courts, can be performed within 1 year
because can die
Beaver v. Brumlow
o Rule: unequivocally referable test: Where an oral contract not
enforceable under the statute of frauds has been performed to such
extent as to make it inequitable to deny effect thereto, equity may
consider the contract as removed from operation of the statute of
frauds and decree specific performance
 Generally looking at taking possession of property and
valuable improvements: Restatement says different:
yielding and allow other forms of reliance
 Performance must be indicative of contract: reasonable
person would see contract here because wouldn’t do conduct
without it
 Had reliance on contract: cashed in retirement and such
a. Land deal, both performed for a while P kept asking for writing, we
will work it out, relationship deteriorates
i. Court used survey to establish price, even though no price term
(bc seller said would work it out)
Exceptions Based on Reliance
Restatement
A. 129: Action in Reliance: specific Performance
33
a. A contract for the transfer of an interest in land may be specifically
enforced notwithstanding failure to comply with the SoF if it is
established that the party seeking enforcement, in reasonable reliance
on the contract and on the continuing assent of the party against
whom enforcement is sough, has so changed his position that injustice
can be avoided only by specific performance
B. 139: Enforcement by Virtue of Action in Reliance: basically promissory
estoppel here
a. 1. a promise which the promisor should reasonably expect to induce
action or forbearance on the part of the promisee or a third person
and which does induce the action or forbearance is enforceable
notwithstanding the SoF if injustice can be avoided only by
enforcement of the promise. The remedy granted for breach is to be
limited as justice requires
b. 2. In determining whether injustice can be avoided only by
enforcement of the promise, the following circumstances are
significant
i. a. the availability and adequacy of other remedies, particularly
cancellation and restitution
ii. b. the definite and substantial character of the action or
forbearance in relation the remedy sought
iii. c. the extent to which the action or forbearance corroborates
evidence of the making and terms of the promise, or the
making and terms are otherwise established by clear
convincing evidence
iv. d. the reasonableness of the action or forbearance
v. e. the extent to which the action or forbearance was
foreseeable by the promisor
counts/notes
A. Memorandum: can be contract or the offer or in different places but linked
a. Party charged has to acquiesce to unsigned portions
i. Typically: mechanical relation, will admit parole evidence
B. Exception: Beaver v. Brumlow: part performance exception for realastate
a. Performance unequivicable referable to contract: typically, taking
possession and permanent improvments
b. Beaver widened test: outsider conclusion that there was contract
C. 129 (part performance) v. promissory estoppel: 129 award specific
performance, unlikely in promissory estoppel: more damages
D. Rice v. Alaska Dem Party
a. SoF inquiry: Statute of frauds applies to promises that cannot be fully
completed in a year
i. 1 year time starts when promise made
st
E. 1 restatement: enforce when party represented it was/would be in writing
F. 139 v. 90:
a. both: reasonable expected reliance, actual reliance, injustice
34
b. 139 subpart 2: significance of reliance, clear/convincing evidence of
terms of promise, reasonableness, availability of other remedies
i. higher bar than §90: clear and convincing evidence
c. not all courts follow 139
G. Promissory restitution claims: also under SoF
H. 1 year thing: can be fully performed? Not: may it end before that
I. linking writings: some courts hesitant to link writing to future documents
a. sometimes okay: parol evidence can show link but maybe not for
missing terms
B. the Sale of Goods Statute of Frauds
UCC
A. 2:201
a. 1. Except otherwise, contract for sale of goods for $500 or more not
enforceable by way of action or defense unless 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
or by his authorized agent or broker. A writing is not insufficient
because it omits or incorrectly states a term agreed upon but the
contract is not enforeceable under this paragraph beyone the quantity
of goods shown in such writing
b. 2. Between merchents: if within reasonable time a writing in
confirmation of the contract and sufficient against the sender is
received and the party receiving it has reason to know its contents, it
satisfies the requirements of subsection (1) against such party unless
notice of objection to its contents is given within 10 days after its
recevived
c. 3. A contract which does not satisfy the requirements of subsection
(1) but which is valid in other respects is enforceable
i. a. if the goods are to be specially manufactured for the buyer
and are not suitable for sale to others in the ordinary course of
the seller’s business and the seller, before notice of repudiation
is received and under circumstances which reasonably indicate
that the goods are for the buyer, has made either substantial
beginning of their manufacture or commitments for their
procurement or
ii. b. if the party against whom enforcement is sought admits in
his pleading, testimony or otherwise in court that a contract
for sale was made, but the contract is not enforceable under
this provision beyond the quantity of goods admitted or
iii. c. with respect to goods which payment has been made and
accepted or which have been received and accepted
B. 1-201
a. (39): signed includes any symbol executed or adopted by a party with
present intention to authenticate a writing
35
b. (46) “written/writing”: includes printing, typewriting or any other
intentional reduction to tangible forms
Notes/Cases
A. UCC: difference: indicate CONTRACT HAS BEEN MADE, not just offered
a. Only necessary term is quantity, even can be incorrect, but only
enforceable to that extent
B. Buffalo v. Hart
a. Bought barns, no writing (except Buffalo’s check) but never endorsed
b. Holding: retaining payment was partial performance
i. 2nd theory: goods had been received and accepted: B took
possession of them
C. 201 C exception: manufactured specific goods, enforced bc evidence contract
exists, less satisfactory if could sell to someone else and less injustice
D. admission: even denial of contract can satisfy admission: if you admit terms
of contract—but cant do it in pleading (like can’t self incriminate)
E. merchants conduct: between two merchants, confirmation is good: if had
quantity in it
a. if sufficient against sender, sufficient against receiver (if not
rejected in 10 days)
b. merchant receiving this deprived of statute of frauds D
c. essentially: merchant attempting to collect against doesn’t have to
sign the writing
36