CONTRACTS OUTLINE
Prof. Schooner Fall 2009
Do Multiple Choice First! Double-check!
ESSAY – Organize, Analyze, Persuade!
 Answer the question asked (as plaintiff’s counsel, as a clerk, etc.)
 Spot issues and identify cases/Restatement BEFORE beginning writing
 Write an outline
 Use the word here
 Do not just cite case names – include the relevant facts!
 Make a conclusion – what DAMAGES would a party be entitled to?
UCC vs. Restatement?
Contract
 Offer
 Acceptance
 Consideration
 Issues
o Option contract and Firm offers
o Battle of the forms
o Agreement to agree
o Electronic contracting
 Breach
Promissory estoppel
 Promise
 Promisor reasonably expects reliance
 Reliance
 Injustice
Restitution
 Implied in fact
 Implied in law
 Promissory restitution
Statute of frauds
 Does contract require writing?
 If so, is there a sufficient writing?
 If not, is there an exception?
Basic interpretation
CONTRACTS OUTLINE
Prof. Schooner Fall 2009
Contract – exchange of promises
Promise - manifestation of intention to act or refrain from acting in a specified way, so
made as to justify a promisee in understanding that a commitment has been made
Contract Formation
Mutual Assent – meeting of the minds; objective – party’s conduct, subjective – party’s
intention
 Parties bound by contract they’ve signed whether read or not; objective intent is
what matters
o Ray v. Eurice – parties confused over specs in signed contract
 UCC – contracts can be made in any manner sufficient to show agreement; contract
can be found even if moment of its making is undetermined (§2-204)
o Harlow & Jones v. Advance Steel – parties negotiate for sale of steel over the
phone; send sales form/purchase order back and forth but do not sign;
contract was oral agreement and forms were confirmatory memoranda
 Related to §27 (if UCC did not apply) – written memorial can come
after the contract is already formed; parties in Harlow agreed to all
terms before the writings
Offer – manifestation of willingness to enter bargain; must give power of acceptance (§24)
 Determined by the objective person standard of a reasonable person standing in the
shoes of the offeree.
o Longergan v. Scolnick – form letters are not offers; ads are solicitations
 Series of letters between buyer and seller; seller reserved right to sell
to anyone; no offers – only preliminary negotiations
o Leonard v. Pepsico – no reasonable person would think Pepsi’s “offer” of a
Harrier jet was real
 Ads are soliciations for offers but can be offers if part of bait-and-switch tactic (Izadi)
o Izadi – ad purporting to give $3k trade allowance had small print which
provided qualifications; reasonable person would have thought ad an offer
 Key question – can offeree just say “yes?” If not, there is not an offer! (§24)
Acceptance – manifestation of assent to terms of offeree; by promise or performance
 Offeree’s power of acceptance
o §36 – Terminated by revocation, lapse of time, death or incapacity of offeror,
or offeree’s counter-offer(§39)/rejection
 Revocation effective upon receipt/communication; can be indirect
communication (§43)
 Normile v. Miller – broker informs Normile that property is
already sold; their power of acceptance is terminated
 Counter-offer must be received by original offeror to terminate power
of acceptance
 Methods of Acceptance
o How to accept - §60 – if offer mandates the time, place, or manner of
acceptance, these terms must be complied with
o Mailbox Rule – acceptance effective upon being dispatched by offeree (§63)
 But under option contract, acceptance effective upon receipt by offeror
o Silence - §69 – can operate as acceptance in certain circumstances
 Register.com v. Verio – Verio contractually bound to Register even
though restrictive terms did not appear until after query run; Verio
should have not run the queries if they didn’t accept
 Bilateral – promise for a promise; offeree is bound to the contract
 Unilateral – promise for performance; offeree not required to do anything
o Classical rule – can revoke offer anytime prior to completion of performance
 Offeror, aware that offeree is attempting to perform, can still revoke.
CONTRACTS OUTLINE
Prof. Schooner Fall 2009

Petterson v. Pattberg – Pattberg communicates he has sold the
mortage before Petterson offers payment; the offer is revoked.
 Very unfair to offeree
o Restatement §45 – option contract created once offeree tenders or begins
the invited performance
 Offeror is bound when offeree renders substantial performance
 Cook v. Coldwell Banker – Cook renders substantial
performance by earning sales commissions prior to defendant’s
modification of contract. Offeror did not have power to revoke
or modify. Coldwell Banker was bound.
o Bilateral vs. Unilateral - §32 – in case of doubt, offeree can accept by
promise or by performance
Consideration – generally only need bargained-for exchange
 Bargained-for exchange - Restatement (§71) approach – consideration must be
something the promisor is seeking
o Williston’s “Tramp” hypothetical – man tells homeless person that he will buy
him a coat if he goes around the corner to a shop
 Conditional gift or a unilateral contract with consideration? Conditional
gift because man is not bargaining for the homeless person’s trip to
the store
 Benefit-detriment test - need benefit to the promisor or detriment to the promisee
o Waiver of any legal right at request of promisor is sufficient
 Hamer v. Sidway – nephew gives up smoking, drinking, swearing, and
gambling in exchange for $500 on 21st birthday; sufficient
consideration
o Promise must induce the detriment and detriment must induce the promise.
 Pennsy Supply v. American Ash - Pennsy suffered a detriment
(assumption of disposal responsibilities for American Ash’s agg-rite),
which is what American Ash wanted. Sufficient consideration even
though agg-rite was “free.”
o §79 – no need for benefit/detriment once you have bargained-for exchange
 EXCEPT Pennsy Supply v. American Ash wants both benefit/detriment
and bargained-for exchange
 Gifts - A gift is generally not consideration. Mere fact that parties state consideration
was given does not make it so.
o Dougherty v. Salt – aunt promises $3000 to nephew; note contains the words
“value received”; no consideration for the promise; aunt makes a future
promise of a gift
 If aunt wanted nephew to have money, she could have made executed
gift now or testamentary gift or gift in trust
o Charitable donation can have implied promise and bargained-for exchange.
 Allegheny College – pledge to college by donor to be paid at death is
enforceable bilateral contract; donor bargained for the memorialization
of his name
 Adequacy – mere inadequacy of consideration does not void a contract (§79(b));
need not have equivalent values
o Batsakis v. Demotsis – In WW2 Greece, Demotsis contracts with Batsakis for
500k drachmae, which she thinks is $2000 US. She promises to pay back
$2000, when in reality it’s only worth $25 due to inflation. Enforceable
contract. It’s defendant’s own fault for not getting a better deal.
 Possibly Demotsis was under duress or coercion or Batsakis
misrepresented – all would have invalidated the contract
CONTRACTS OUTLINE
Prof. Schooner Fall 2009

Past consideration – generally does not count for a contract
o Plowman v. Indian Refining – employees forced to retire but told they will be
paid pension due to their years of service; all they have to do is pick up the
checks; years of service is past consideration and doesn’t count; picking up
their checks doesn’t count because it wasn’t bargained for
o May be part of promissory restitution claim
Issues of Contract Formation
Agency – party must have power to enter into contract and bind the principal through
actual or apparent authority
 Plowman v. Indian Refining – VP/GM did not have power to enter into contract with
employees, even if there was consideration, contract would be invalid
Option contracts and situations when offers may not be revoked
 Time provisions in initial offer do not necessarily carry over to counter-offer
o Normile v. Miller – Normile’s initial offer to Miller has time provisions; Miller
marks up offer and counter-offers but time provisions do not carry over;
Normile did not have first option on the property
 §87(1)(a) – contract in writing and signed by offeror with purported consideration is
binding as option contract
o May conflict with Dougherty v. Salt, which held just saying there was
consideration was not enough
 Pre-acceptance reliance – offer is revoked after offeree relies
o General construction bid rule – Prime contractor is not bound to
subcontractor’s bid at time it is used, but subcontractor is bound to general
contractor for its bid.
 Contrary case - James Baird v. Gimbel Bros – Baird’s bid on building
made in reliance on Gimbel’s bid; Gimbel’s offer states acceptance can
only come after Baird’s bid is accepted; no option contract because
there was no consideration; no promissory estoppel either. Neither
party is bound.
 Drennan v. Star Paving – Drennan relies on Star’s bid; Star made a
mistake and informs Drennan; Star argues they revoked before
acceptance and that their price error should have been obvious; Court
finds no true exchange of promises, no option or bilateral contract.
 But there is promissory estoppel
o Option contract must be supported by consideration.
 Berryman v. Kmoch – Berryman promises option on the land in
exchange for $10 and other valuable consideration; $10 never paid;
Kmoch incurs expenses garnering interest in the land, but this
provided no benefit to Berryman; no consideration found
 Also considers promissory estoppel but not found
o Pop’s Cones v. Resorts International – no option contract because there was
no official offer, but Resorts’ assurances that a contract was 95% there was
sufficient to consider a promissory estoppel claim
o §87(2) creates option contract from an offer, which can give expectation
damages
o §90 creates enforceable promise, which can only give reliance damages
 Firm offers – offers made irrevocable
o Restatement §87(1)(b) – irrevocable by statute
o UCC §2-205 – firm offer irrevocability – need 1) offer 2) by merchant 3) for
sale of goods 4) in signed record 5) with assurance to leave open 6) for
stated time or reasonable time but no longer than 3 months (unless there is
consideration)
CONTRACTS OUTLINE
Prof. Schooner Fall 2009
 Offeree does not have to rely
 If offeree supplies form, offeror must separately sign provision
Qualified acceptance – battle of the forms
 Common law mirror-image – §58 – promise/performance in acceptance must be the
same as in the offer
 Common law last-shot – whoever sends the last form has their terms govern
 UCC §2-207 – change mirror image and avoid last-shot
o Additional – original agreement silent on topic
o Different – not silent; one party inconsistent with the other
o Need conflicting offer/acceptance
 Brower v. Gateway - §2-207 doesn’t apply because court doesn’t
consider phone order to constitute an offer
o (1) even if form has additional/different terms, still an acceptance, unless
offeree’s acceptance is conditional upon offeror’s assent to these terms
 Can apply to exchange of writings or oral agreement confirmed in
writing
o (2) Additional terms are proposals for addition
 Between merchants – automatically part of contract unless
 Offer limits acceptance to its terms
 Terms materially alter (surprising terms)
 Objection already given or given within reasonable time
 Brown Machine v. Hercules – Hercules’s PO without indemnity is an
offer expressly limiting acceptance to its terms; so Brown had to
accept
 Brown’s Order Ackn. with different terms was proposal for
modification; Hercules needed to expressly assent to indemnity
clause; Hercules saying “the other specifications are correct”
does not apply to indemnity provision; Hercules’s terms govern
– no indemnity
o Different terms – courts disagree because they are not in 2-207(2)
 Some exclude; some consider the same as additional based on
Comment 3; some use knock-out rule where all conflicting terms are
thrown out of contract
o (3) If both parties are acting like there is a contract, there is one even if
writings don’t show it. (Rejects common law approach)
 §59 – purported acceptance conditional on offeror’s assent to additional or different
terms is a counter-offer; Comment – new terms can be proposals for modification
o Princess Cruises v. GE – GE’s price quote altered terms of Princess’s PO;
counter-offer accepted by Princess’s actions (phone call, payment, and
inaction); GE’s terms applied, limiting their liability
Postponed Bargaining – agreements to agree
 Contract to enter into future agreement must specify all material and essential terms.
Need reasonably certain terms (§33).
o But UCC §2-204 – if parties intend to make a contract, there is one even if
one or more terms are left open
o Walker v. Keith – rent was not specified with certainty in renewal option of
lease; not business of courts to fix rent; no agreed-upon price or agreed-upon
method to fix the price; lessee did not have option
 May have reliance/restitution remedy though
o Lots of courts disagree with this rule!
 If parties intended to be bound, contract should be enforced
CONTRACTS OUTLINE
Prof. Schooner Fall 2009
Renewal clause may have been consideration for original agreement;
should be enforced
o UCC §2-305 – contract enforced even with open price term if parties intended
to be bound; uses “reasonable price”
 Letters of intent not enforceable unless parties intend them to be binding.
o Quake Construction v. American Airlines – LoI to Quake awarded them
contract and authorized the work; But contract agreement was being
prepared and Jones reserved right to cancel if parties could not fully agree;
LoI is ambiguous – question for factfinder
 Concurring – LoI is contract to negotiate in good faith; middle ground
between binding and non-binding
 Making written memorial does not mean there isn’t already a contract, but could
indicate preliminary negotiations (§27)
o Quake Construction – Jones’s intent to create a written contract later does not
mean their LoI did not already create a contract
Electronic Contracting – no negotiation; no face-to-face; disparities in bargaining power
 Shrinkwrap terms – see terms after tearing off shrinkwrap; if you don’t like them,
return the product
o Offer is shipment of the product; acceptance is not returning within specified
time period
 Brower v. Gateway 2000 – customer receives computer; contract
formed after 30 days and computer not returned; critics argue
contract on basis of phone order of computer
 Not practical for company to have to disclose all terms over phone
o Contract of adhesion valid. If consumer doesn’t like terms, can shop
elsewhere.
o UCC §2-302 – Unconscionable clauses can be voided.
 Brower – clause requiring arbitration through ICC – too inaccessible
and expensive an organization; filing fee > cost of computer
 Clickwrap terms – must agree to terms prior to purchase/downloading
o Generally valid but possibly coercive; convenient means to get products at
low prices and high speed
 Browsewrap terms – no click button; but consumer put on notice; terms of use
o Register.com v. Verio – restrictive terms showed up after Verio runs query;
once they see the terms, they can’t claim ignorance; can’t keep running the
queries to get information for spam
o To be enforceable, need 1) adequate notice, 2) opportunity for review, 3)
notice that action manifests assent, and 4) user takes the action
 Register – maybe the first query Verio ran, they were not bound
Liability without Consideration/Bargained-for Exchange
Promissory Estoppel – rarely successful argument
 Remedy relied upon when promisee’s actions are not bargained-for; no consideration
but argument can often be made
 Arguments for consideration that are rejected:
o See pre-acceptance reliance cases (above)
o Kirksey v. Kirksey – plaintiff moving to defendant at his invitation
o Greiner v. Greiner – plaintiff moves at defendant’s request; mom wants to
give son money after he was left out of father’s will
o Katz v. Danny Dare – employer bargains for employee’s voluntary resignation
 Elements - § 90
o Promise

CONTRACTS OUTLINE
Prof. Schooner Fall 2009
Pop’s Cones v. Resorts International – requires “clear and definite”
promise (not in Restatement); this definition gets stretched
 King v. BU – give ownership of all papers to BU that they had in their
possession at the time of his death
 Promise can be implicit
 Wright v. Newman – promise made by defendant putting name
on child’s birth cert., giving child his surname, and acting as
father
 Shoemaker v. Commonwealth – letter saying bank “might” have to
buy insurance if Shoemakers don’t obtain it
Promisor should reasonably expect promisee to rely
 Pop’s Cones – Resorts tells Pop’s contract is “95% there” and that they
should not renew their current lease
 Should expect reliance when specifically telling/inviting someone to do
something (e.g., moving – Kirksey, Greiner)
 Wright v. Newman – father should expect mother with child to rely on
his promise to be the father
Promisee does rely (inducing such action or forebearance)
 Must be reliance that the promisor reasonably expects
 Berryman v. Kmoch – Kmoch’s actions in garnering interest in buyers
for the land was not what Berryman would reasonably expect; no
promissory estoppel
 Pop’s Cones – Pop’s closed up their current shop, moved equipment to
storage, got attorney, and laid off employees
 Wright v. Newman – mother doesn’t seek out real father based on
“father’s” promise
 King v. BU – BU indexes King’s papers, provided staff to assist
research, and held convocation regarding the papers
 But could argue this reliance was actually a benefit to BU
 Katz v. Danny Dare – Katz voluntarily resigns in reliance on pension;
Dare argues no detrimental reliance because Katz would be fired
otherwise
 Promise must come before reliance
 Hayes - Employee retires and then is promised pension; not
enforceable
 Shoemaker – mortgagee doesn’t obtain insurance at bank’s promise;
should they rely when their contract states they must get insurance?
 Bank argues Shoemaker didn’t rely because they weren’t going
to get insurance anyway
 Elements 2 & 3 --> detrimental reliance
Injustice avoided only by enforcement
 May be when parties do not negotiate in good faith or when parties are
not equally sophisticated
 Pop’s Cones – Resorts negotiated behind their back while they
were relying; Pop’s lost 2 years worth of business; Resorts took
advantage of Pop’s with their greater bargaining power
 No injustice when promise that falls apart is part of your everyday job
 Berryman v. Kmoch – Kmoch as an investor in real estate
knows what can go wrong with real estate deals
 Losing livelihood/home can constitute injustice
 Kirksey v. Kirksey, Greiner v. Greiner – plaintiff is homeless

o
o
o
CONTRACTS OUTLINE
Prof. Schooner Fall 2009

Katz v. Danny Dare – loss of pension when employee is too old
to return to full-time work
 Shoemaker – plaintiffs are homeless and still have their
mortgage to pay; consider reasonableness; homeowners were
in best position to avoid this type of loss
 Wright v. Newman – loss of child support, inability to find real father,
loss of father-child relationship
 BU v. King – BU’s energy/money wasted; they lose future earnings
 Within the family
o Gratuitous promise is unenforceable.
 Kirksey v. Kirksey – brother-in-law’s promise to give land is revocable;
it was only a condition on the gift that Mrs. Kirksey had to move; case
brought in anti-women’s rights time period
o Other courts find promise in family enforceable.
 Greiner v. Greiner – promissory estoppel does apply when mom
promises son land; even though son may not have relied to his
detriment; he may have received a benefit and been better off
o Moral argument sometimes made to justify enforceable promise.
 Wright v. Newman – immoral to let male partner renounce his
voluntary obligation of fatherhood after 10 years
 Charitable subscriptions
o §90(2) eliminates reliance requirement (element 3); most courts do not adopt
 King v. Trustees of BU – promissory estoppel found where BU relied on
King’s promise to donate his papers
o Bailor-bailee relationship – bailor passes possession but not ownership
 King – King, bailee, passes his papers to BU, bailor
 Commercial context
o Promises of pensions can be enforceable
 Katz v. Danny Dare – employee became permanently disabled for
company; unfair to leave him with nothing
o Any change of position is sufficient to invoke promissory estoppel
 Vastoler – can even be financially beneficial; employee promised
pension for promotion, which brought added stress and responsibility
o Promise by a mortgagee to obtain insurance are potentially actionable
 Shoemaker v. Commonwealth Bank – bank “promised” to get
insurance via letter and phone call; didn’t specify duration; then house
burns down when there wasn’t actually insurance
Restitution and Unjust Enrichment – liability for benefits received
 Focus on enriched party and not injured party
 Services between family members are presumed to be gratuitous
 Implied-in-fact contracts – looks like a contract if looking at the facts but no
formal promises
o Treated as enforceable contract – can get expectation damages
o Common situation: services performed at another’s request; defendant need
not receive anything of actual value
o Cohabitation – Watts v. Watts – no express marriage contract, but man sure
acted like the two were married for 12 years; woman took his surname,
children took surname, joint tax returns, joint bank accounts, joint
medical/life insurance, joint real and personal property
 Man argues relationship was illegal (sexual) and shouldn’t be enforced;
matter for the legislature and not the courts
CONTRACTS OUTLINE
Prof. Schooner Fall 2009


Implied-in-law/quasi contracts & unjust enrichment – law implies an
obligation based on parties’ assent by words or acts; not true contracts!
o General rule – 1) P conferred benefit to D 2) D has knowledge of benefit 3) D
accepted/retained benefit, 4) Inequitable for defendant to retain (Commerce)
 Watts – woman acts as wife, bears children, and works unpaid at
man’s business; James knew about it; inequitable for James to retain
because employees get paid; to give woman nothing would be unfair!
 Trial – Watts gets 10% of defendant’s increased wealth
o Subcontractor seeking recovery against owner must exhaust remedies against
general contractor AND show that owner did not pay anyone for
subcontractor’s services. Limits recovery to true unjust enrichment.
 Commerce Partnership v. Equity – owner paid out more than the total
contract price, but sub didn’t get paid; general contractor went
bankrupt; open question whether owner made payment covering
benefits sub conferred
 Mechanic’s lien – statutory encumbrance giving contractors ownership
interest in their projects until they are paid
o Rest. To Rest. §116 – a) acted unofficiously and with intent to charge b)
services necessary to prevent pain/suffering c) no reason to know receiver
wouldn’t consent d) impossible for other to give consent or immaterial
because of youth or mental impairment
 Credit Bureau Enterprises v. Pelo – hospital wants payment for
services provided to involuntarily committed Pelo; Pelo’s dissent to
services provided does not prevent recovery; hospital did not act
officiously, but maybe cops who committed Pelo did
 High transaction costs favor restitution - Pelo has shotgun and
is mentally impaired – no time for a contract!
 Good Samaritan or non-business may not have intent to charge
o Rest. To Rest. §117 – can recover after preserving another’s things or credit;
similar to §116 – still cannot confer benefit officiously
Promissory Restitution – promise to pay for benefits received after the fact;
promise plus moral obligation
o Promise must revive pre-existing obligation that became inoperative
 Mills v. Wyman – Mills cares for Wyman’s son who eventually dies;
Father promises Mills payment in letter; but adult son’s debts create
no obligation upon the father, so father’s promise is not enforceable
because no obligation in the first place
 Examples: debt barred by statute of limitations (§82); debt discharged
by bankruptcy (§83); obligation of minor (voidable duties) (§85)
o Moral obligation is sufficient to support promise where promisor receives
material benefit.
 Webb v. McGowin – Webb saves McGowin’s life by falling with 70lb
block instead of letting it hit McGowin; McGowin’s subsequent promise
to pay Webb is enforceable; Webb acting in professional capacity with
intent to charge
 Contrast with Harrington v. Taylor – P steps in to stop husband from
being killed by wife with ax; husband promises P money but doesn’t
pay; court denies enforcement; P was just a good Samaritan acting
w/o intent to charge
o §86 – Promise for benefit received binding to extent necessary to avoid
injustice unless promisee conferred benefit as gift or no unjust enrichment or
if promise’s value is disproportionate to the benefit
CONTRACTS OUTLINE
Prof. Schooner Fall 2009
Statute of Frauds
 When is writing required for contract to be enforceable?
o §110 – common types of contracts requiring writing
 Executor-administrator provision – agreement not to be performed
during lifetime of bargainer
 Suretyship provision – answer for duty of another; indemnification
 Marriage provision – bargains in consideration of marriage
 Land contract provision – any sale and long leases (>1 year)
 One-year provision – performance >1 year from making of contract
o UCC §2-201 – writing required for sales of goods in excess of $500
 Writing not insufficient for omitting or incorrectly stating term, but
contract enforceable only to quantity of goods shown in writing
 (2) Between merchants – receiver of writing has 10 days to object or
statute of frauds is satisfied; signature assumed
 (3) Exceptions: (a) custom goods that have been substantially begun;
(b) opposing party admits contract; (c) partial/full performance
 Buffaloe v. Hart – meets (c) because Buffaloe made partial
payment for 5 barns by check and Mrs. Hart accepted; the
return of the check later does not matter
 What is required in the writing?
o 1) Identify subject matter, 2) Indicate contract has been made, 3) State
essential terms, 4) Signature/authentication of party against whom
enforcement is sought
 Buffaloe v. Hart – check meets 1-3 but not 4 because it was only
signed by buyer and not endorsed by seller
o “Writing” not just words on paper (UCC §1-201(46))
o If writing is lost, oral evidence of its existence may suffice
Contract Interpretation
Interpretation – determining meaning that parties attributed to contractual language
 Subjective – if parties differ in their interpretations, no contract formed because no
meeting of the minds
o Raffles – Peerless case – buyer/seller disagree over which ship named
Peerless the contract refers to
 Objective – interpret based on what reasonable person would have thought entering
the contract; considers industry standards and common usages
o Problem: reasonable person’s interpretation could differ from what either
party intended
 Modified objective - §201
o (1) – if both parties attach same meaning to a provision, that meaning will
govern
o (2) – if one party knew or had reason to know of the other’s interpretation,
then the other’s meaning applies
 Joyner v. Adams – Joyner thinks “developed” means buildings on lots,
but Adams thinks “developed” means water/sewer lines installed with
lot ready for construction; court must determine if either party knew of
the meaning attached to the provision by the other party
o (3) – if neither knew or had reason to know the other’s interpretation, neither
party is bound by the other’s meaning
o Frigaliment v. BNS – parties disagree over meaning of chicken
 Court considers 1) language of contract, 2) preliminary negotiations
between parties, 3) trade usage, 4) government standard of DoA
regulation (indirect reference in contract)
CONTRACTS OUTLINE
Prof. Schooner Fall 2009
Under §201, neither party knew of other’s interpretation, but
Frigaliment probably had reason to know of BNS’s interpretation from
cablegram negotiations and the DoA definition
 Case dismissed – parties left to noncontractual remedies
Principles/Maxims – not necessarily controlling; never use all of them; no particular order
 Noscitur a sociis – meaning of a word in series affected by others in the same series
 Ejusdem generis – general term with specific term construed to only include things
like the specific term
 Expressio unius exclusio alterius – if only specific terms are listed, other items of
similar kind are excluded
 Ut magis valeat quam pereat – an interpretation making contract valid favored
 Omnia praesumuntur contra proferentem – prefers interpretation that is less
favorable to the one by whom the contract was drafted; construe language against
the drafter
o Joyner v. Adams – trial court should not have construed contract against
defendant when there was no evidence he drafted; not an adhesion contract –
parties (lessor/lessee) were equally sophisticated
 Interpret contract as a whole
 Purpose of the parties
 Specific provision is exception to general one
 Handwritten/typed (more recent, more emphasized) provisions control printed
provisions
 Public interest preferred
 §203(a) – interpretation that gives a reasonable, lawful, effective meaning is
preferred
o Frigaliment v. BNS – BNS argues only reasonable interpretation of contract is
one that would be profitable to them; but a contract may be reasonable even
if it is not profitable
 §204 – when parties intended to make a contract but have not agreed on a term,
court may supply a reasonable term; not used frequently
Types of Damages
Restitution – breaching party should not benefit from bad behavior; cause breaching party
to give back value of benefit received
Reliance – put wronged party/plaintiff in position he would have been had contract never
been entered into
Expectation damages – allow wronged party/plaintiff to recover the expectation interest;
plaintiff obtains the benefit of the bargain had the contract been fully performed
Functions of Legal Formality
Evidentiary – evidence that contract exists
Cautionary – formality like a seal acts as check against inconsiderate action
Channeling – formality serves to mark or signify the enforceable promise
UCC/Restatement Checklist
UCC Article 2 – applies to both consumer and commercial sales of goods
 UCC is a gap-filler; not the law of any state directly; has to be adopted
 Goals – make commercial law reflect actual agreement between parties; reflect
current business practice; impose duty of good faith on all parties
 Does UCC apply for combined goods/services contract? If not primarily for goods,
then common law applies and not UCC. Use Coakley factors:
o Language of contract
 Princess Cruises v. GE – contract primarily for repair and inspection;
“Quotation for Services”
o Nature of supplier’s business
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CONTRACTS OUTLINE
Prof. Schooner Fall 2009
Princess Cruises – all correspondence from GE’s Installation and
Service Engineering Department
o Intrinsic worth of materials
Considers trade usage in evaluating terms
o Harlow & Jones v. Advance Steel – steel shipped in October will arrive in
November; Advance should not have rejected delivery – no material delay
§2-104 – merchant – person who deals in goods of kind or holds himself out as
having knowledge or to whom such knowledge may be attributed by employment of
agent or broker
§2-105 – goods – all things which are movable
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