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1.4.9 Common Law Mirror Image Rule: Rule that required acceptance’s terms to correspond exactly
5.10.11 General Rule: When the impracticability is temporary or partial, the promisor is obligated to
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- 1 I. MUTUAL ASSENT—OFFER AND ACCEPTANCE....................................................... - 1.1 A. MUTUAL ASSENT.............................................................................................................. - 1.1.1 Objective Theory of Contracts............................................................................................... - 1.1.2 2. Intending Legal Consequence................................................................................. - 1.1.3 3. Intent to Formalize Agreement................................................................................ - 1.1.4 4. Missing or Open Terms........................................................................................... - 1.2 OFFER................................................................................................................................................ - 1.2.1 1. What Constitutes an Offer? Objective Standard.................................................... - 1.2.2 2. What Is/Is Not a Promise/Offer?............................................................................. - 1.2.3 3. Types of Contracts................................................................................................... - 1.3 C. ACCEPTANCE.................................................................................................................... - 1.3.1 General:.................................................................................................................................. - 1.3.2 1. Relationship to Offer............................................................................................... - 1.3.3 2. Acceptance by Authorized Party............................................................................. - 1.3.4 3. Knowledge of Offer................................................................................................. - 1.3.5 4. Intent to Accept....................................................................................................... - 1.3.6 5. Necessity for Communication of Acceptance......................................................... - 1.3.7 Late Acceptance is…............................................................................................................. - 1.3.8 6. Necessity of Notice in Unilateral Contract.............................................................. - 1.3.9 Three views on whether the offeree must give notice: - 1.3.10 7. Acceptance of an Offer Looking to a Series of Contracts....................................... - 1.3.11 8. Acceptance by Silence............................................................................................. - 1.3.12 9. Acceptance by Act of Dominion............................................................................. - 1.3.13 10. Unsolicited Sending of Goods................................................................................. - 1.3.14 11. Mailbox Rule: When Is an Acceptance in a Bilateral Contract Effective?............. - 1.3.15 12. Prescribed Method of Acceptance........................................................................... - 1.3.16 13. Parties in the Presence of One Another................................................................... - 1.3.17 14. Withdrawal of Acceptance....................................................................................... - 1.3.18 15. Offeree sends both acceptance and Rejection......................................................... - 1.3.19 16. Risk of Mistake in Transmission by an Intermediary............................................. - 1.4 D. TERMINATION OF REVOCABLE OFFERS................................................................. - 1.4.1 1. Lapse of Time.......................................................................................................... - 1.4.2 2. Death of Offeror...................................................................................................... - 1.4.3 3. Incapacity of Offeror............................................................................................... - 1.4.4 4. Death or Incapacity of the Offeree F 0 E 0Terminates the offer..................................... - 1.4.5 5. Revocation............................................................................................................... - 1.4.6 6. Death or Destruction............................................................................................... - 1.4.7 7. Supervening Illegality............................................................................................. - 1.4.8 8. Rejection or Counter-Offer...................................................................................... - with the offer’s terms in order for a contract to be formed........................................................................ - the sale of goods......................................................................................................................................... 1.4.10 UCC § 2-207 [Purpose of Neutrality] Designed to negate the mirror image rule in cases involving - 1.5 E. IRREVOCABLE OFFERS—OPTION CONTRACTS................................................... - 1.5.1 1. What Makes an Offer Irrevocable?......................................................................... - 1.5.2 2. Statutes.................................................................................................................... - 1.5. - 1.5.4 3. Terms Are Synonymous: Option K = Irrevocable Offer = Firm Offer.................... - 1.5.5 4. Termination of Irrevocable Offers........................................................................... - 1.5.6 5. Acceptance of an Irrevocable Offer Effective occurs on receipt............................ - 1.6 F. UCC § 2-206.......................................................................................................................... - 1.6.1 1. Introduction............................................................................................................. - 1.6.2 2. Distinction Between a Unilateral and Bilateral Contract........................................ - 1.6.3 3. The Mailbox Rule.................................................................................................... - 1.6.4 4. Beginning of Performance in Bilateral K................................................................ - 1.6.5 5. Restatement (Second)..............................................................................................
- 1.7 G. Certainty...............................................................................................................................
- occasionally supply the missing term......................................................................................................... 1.7.1 Common Law—no room for gap-fillers or implication or agreement may be void. But courts
- 1.7.2 2. Uniform Commercial Code.....................................................................................
- 2 II. CONSIDERATION AND ITS EQUIVALENTS............................................................... - 2.1 A. INTRODUCTION................................................................................................................. - 2.2 1. What Promises Should Be Enforced......................................................................................
- 1 B. CONSIDERATION..............................................................................................................
- 1.1 1. In General..............................................................................................................................
- 1.2 2. Past Consideration and Motive..............................................................................................
- 1.3 3. Adequacy of Detriment..........................................................................................................
- 1.4 4. Sham and Nominal Consideration
- 1.5 5. Invalid Claims........................................................................................................................
- 2 C. THE PRE–EXISTING DUTY RULE / MODIFICATIONS............................................
- 2.1 1. Pre–Existing Duty and Promises [Rule in decay and reformulation]...................................
- 2.2 II. Modification of K...........................................................................................................................
- 2.3 III. 3 Party Cases—Promise of a Guarantor.........................................................................................
- 2.4 2. Pre–Existing Duty and Accord and Satisfaction–Foakes v. Beer
- 2.5 Liquidated and Unliquidated Claims...................................................................................................
- 2.6 Analyzing an Accord and Satisfaction
- 2.7 Accord and satisfaction questions have 3 elements:
- 2.8 3. UCC Inroads on Pre–Existing Duty Rule [Post Sale Promises]...........................................
- 2.9 a. Modifications: UCC § 2-209(1)..............................................................................
- 2.10 b. NOMCs:
- 2.11 c. Waiver Concept:
- 2.12 d. Bad Faith and Duress
- 2.13 e. Release/Discharge (UCC § 1-107) and Past Consideration......................
- 2.14 f. New York Statutes re Release/Discharge..................................................
- 3 D. UNCONSCIONABILITY...................................................................................................
- 3.1 1. Unconscionability in Equity/Law..........................................................................................
- 3.2 2. What Constitutes Unconscionability.....................................................................................
- 3.4 a. Unfair Surprise (Procedural Unconscionability): Unaware = Lack of Meaningful Assent.............
- 3.5 b. Oppression (Substantive Unconscionability) [Harsh Term]...................................
- 3.6 c. The Hybrid–Surprise and Oppression.....................................................................
- 3.7 3. Judge Versus Jury...................................................................................................................
- 3.8 4. Unconscionability judged at time of K’ing...........................................................................
- 3.9 5. Majority of Decisions are for Consumer Protection..............................................................
- 4 E. SPECIAL PROBLEMS IN BILATERAL CONTRACTS................................................
- 4.1 1. Is One Promise Consideration for the Other?........................................................................
- 4.2 2. Mutuality of Obligation/Consideration..................................................................................
- 4.3 a. Each party must supply consideration for both to be bound.
- 4.4 b. Unilateral Contracts...........................................................................................................
- 4.5 c. Void and Voidable Promises...............................................................................................
- 4.6 d. Illusory Promises...............................................................................................................
- 4.7 e. Right to Terminate in Contract
- 4.8 f. Conditional Promises.
- 4.9 g. Aleatory Promises...................................................................................................
- 4.10 i. UCC § 2-306(2) Best Efforts in Exclusive Goods K.................
- 4.11 j. Agreement Allowing Party to Supply Material Term...............................
- 4.12 k. Forging – Void Contract Is Not Always a Nullity.
- 4.13 j. Covenants not to compete. [general issue of reasonableness]................
- 5 F. REQUIREMENTS AND OUTPUT CONTRACTS..........................................................
- 5.1 1. Introduction............................................................................................................................
- 5.2 2. Validity...................................................................................................................................
- 5.3 3. How Much Is a Requirements Buyer Entitled to?.................................................................
- 5.4 4. May a Requirements Buyer Diminish or Terminate Requirements?.....................................
- 6 G. MUST ALL OF THE CONSIDERATION BE VALID?...................................................
- 7 H. ALTERNATIVE PROMISES.............................................................................................
- 7.1 1. Where the Choice of Alternatives Is in the Promisor............................................................
- 7.2 2. Where the Choice of Alternatives Is in the Promisee............................................................
- 7.3 I. PROMISSORY ESTOPPEL..................................................................................................
- 7.4 1. Introduction............................................................................................................................
- 7.5 2. 1st Restatement § 90 Requires:..............................................................................................
- 7.6 3. 2nd Restatement §
- 7.7 4. Present Approach to Gift Promises........................................................................................
- 7.8 Areas Where the Doctrine is Commonly Used in the Business Context.............................................
- 8 III. LEGAL CAPACITY....................................................................................................................
- 9 A. INFANTS..............................................................................................................................
- 9.1 1. Who Is an Infant?...................................................................................................................
- 9.2 2. Infant's Promise is Voidable...................................................................................................
- 9.3 3. Tort Liability..........................................................................................................................
- 9.4 4. Avoidance and Ratification....................................................................................................
- 9.5 5. Effect of Misrepresentation of Age........................................................................................
- 9.6 6. Restitution After Disaffirmance: I as Π or Δ.........................................................................
- 9.7 7. Necessaries.............................................................................................................................
- 10 B. MENTAL INCOMPETENTS.......................................................................................................
- 10.1 1. General Info:
- 10.2 2. Testing for Mental Incompetency:
- 10.3 3. Restitution:
- 10.4 4. Ratification:
- 10.5 5. Necessaries:
- 10.6 7. Intoxication:
- 11 IV. PROPER FORM, WRITING, AND INTERPRETATION..............................................
- 11.1 A. PAROL EVIDENCE RULE....................................................................................
- 11.2 1. Rule..........................................................................................................................
- 11.3 2. What types of evidence does the PE rule exclude?
- 11.4 3. How to Determine Finality
- 11.5 4. How to Determine Completeness – 6 Approaches..................................................
- 11.6 a. Four Corners Rule:
- 11.7 b. Collateral Contract Rule/ Wigmore:
- 11.8 c. Williston’s view – Majority Approach:
- 11.9 d. Corbin’s view:
- 11.10 e. § 2-202. Final Written Expression: Parol or Extrinsic Evidence.
- 11.11 f. 2nd Restatement:
- 11.12 5. Subsequent Agreement............................................................................................
- 11.13 6. Separate Consideration
- 11.14 7. Is the Offered Term Contradictory or Consistent?..................................................
- 11.15 8. Undercutting the Integration—PE rule doesn’t apply until it is known that a K exists.......
- 12 B. INTERPRETATION............................................................................................................
- 12.1 1. What Is Interpretation?............................................................................................
- 12.2 2. Variety of Views......................................................................................................
- 12.3 a. Plain Meaning Rule:
- 12.4 b. Williston’s Rule for an Integration:
- 12.5 c. Williston’s Rule for a Non-Integration:
- 12.6 d. Corbin and Rest. (2d):
- 12.7 e. UCC 2-202—Always allows extrinsic even if there is no ambiguity........
- 12.8 3. Rules of Construction..............................................................................................
- 12.9 4. Course of Dealing....................................................................................................
- 12.10 5. Course of Performance............................................................................................
- 12.11 6. Usage of Trade.........................................................................................................
- 12.12 When are Course of dealing, Course of performance, and Trade usage Used:
- 12.13 7. Relationship Between Parol Evidence Rule and Interpretation..............................
- 3 SECOND SEMESTER.......................................................................................................................
- 4 V. STATUTE OF FRAUDS......................................................................................................
- 4.1 Overview:............................................................................................................................................
- 4.1.1 History:..................................................................................................................................
- 4.1.2 Steps in analysis:....................................................................................................................
- 5 One Year Provision:...........................................................................................................................
- 5.1 Possibility of Performance In One Year:..........................................................................................
- 5.2 Doctrines Which Put a K w/in the Statute of Frauds:....................................................................
- 5.2.1 Termination/Right to Extend Provisions:..............................................................................
- 5.2.2 Bilateral K where one promise can’t be performed in 1 year and the other can:..................
- 5.2.3 Rule: If one promise is w/in the S/F the whole K is w/in S/F.
- 5.2.4 There Must be a Sufficient Memorandum to be Enforceable................................................
- 5.2.5 Requirements for Sufficiency................................................................................................
- 5.2.6 A Writing—............................................................................................................................
- 5.2.7 Signed by Party To Be Charged—.........................................................................................
- 5.2.8 All essential terms stated with reasonable clarity—..............................................................
- 5.2.9 Parole Evidence and the Memo.............................................................................................
- 5.2.10 Memo can be prepared late or early—...................................................................................
- 5.2.11 Preparation and Delivery of the Memo..................................................................................
- 5.2.12 Several Writings Can Create One Memo:..............................................................................
- 5.2.13 Claim of inaccurate terms in memo:......................................................................................
- 5.2.14 The Sale of Goods: UCC §§ 2-201 and 1-206.......................................................................
- 5.3 Doctrines Which Take A Case Out Of S/F.......................................................................................
- 5.3.1 K’s Of Indefinite Duration:....................................................................................................
- 5.3.2 Alternative Promises— “either…or” but treat as if they are one promise............................
- 5.3.3 Full Performance—................................................................................................................
- 5.3.4 Unilateral Ks—follows the full performance rationale.........................................................
- 5.3.5 Promissory Estoppel—..........................................................................................................
- 5.3.5.1 Mcintosh v. Murphy...............................................................................................................
- 5.3.6 Formal Ks and Ks Under Seal—...........................................................................................
- 5.3.7 Promise to work for life—.....................................................................................................
- 5.3.8 Testamentary Provision—Promise to leave someone $ at one’s death/in one’s will.............
- 5.3.9 Modifications Not w/in S/F....................................................................................................
- 5.4 Void v. Unenforceable........................................................................................................................
- 5.4.1 Problems (p. 769)...................................................................................................................
- 5.5 V. CONDITIONS, PERFORMANCE AND BREACH..................................................................
- 5.5.1 A. Nature and Classification of Conditions.................................................................
- 5.5.2 1. Definition:
- 5.5.3 2. Classifications of Conditions:.................................................................................
- 5.5.4 3. Failure of a condition:.............................................................................................
- 5.5.5 4. Promises distinguished from Conditions:................................................................
- 5.5.6 5. Sale of Goods..........................................................................................................
- 5.5.7 Perfect Tender Rule...................................................................................
- contract Buyer may:.................................................................................................................................... 5.5.8 1. If the goods fail in any respect to conform to the
- 5.5.9 2. Exceptions to the Perfect tender Rule............
- 5.5.10 3. Bad Faith........................................................
- 5.5.11 4. Installment Contracts.....................................
- 5.5.12 5. Curing............................................................
- 5.6 B. CONDITIONS, SUBSTANTIAL PERFORMANCE, AND MATERIAL BREACH.....
- 5.6.1 1. Performance of express and Constructive Conditions............................................
- 5.6.2 Measuring the Materiality of Breach.....................................................................................
- 5.6.3 a. 2nd Restatement:.....................................................................................................
- 5.6.4 Effect of Delay.......................................................................................................................
- 5.7 C. RECOVERY DESPITE MATERIAL BREACH.............................................................
- 5.7.1 General Rule..........................................................................................................................
- 5.7.2 1. Divisibility.........................................................................................................................
- 5.7.3 2. Independent Promise...............................................................................................
- 5.7.4 Quasi-Contractual Relief.......................................................................................................
- 5.7.5 Statutory Relief......................................................................................................................
- 5.8 D. EXCUSE OF CONDITIONS..............................................................................................
- 5.8.1 Prevention..............................................................................................................................
- 5.8.2 Estoppel, Waiver and Election...............................................................................................
- 5.8.3 Equitable estoppel..................................................................................................................
- 5.8.4 Waiver defined
- 5.8.5 Excuse of Condition Involving Forfeitures (a.k.a. avoiding a forfeiture).............................
- 5.8.6 Excuse of Conditions Because of Impossibility....................................................................
- 5.9 PROSPECTIVE UNWILLINGNESS AND INABILITY TO PERFORM: REPUDIATION....
- 5.9.1 Repudiation = Total Breach...................................................................................................
- 5.9.2 Aggrieved party must prove:
- 5.9.3 ON EXAM:
- 5.9.4 Prospective Failure of Condition –
- 5.9.5 Prospective Inability: If not a repudiation then not a breach.
- 5.9.6 Ability to retract serious inability due to change in conditions:............................................
- 5.9.7 Retraction of a Repudiation or Prospective Failure of Condition.........................................
- 5.9.8 Urging Retraction...................................................................................................................
- 5.9.9 Effect of Impossibility on a Prior Repudiation......................................................................
- 5.9.10 Failure to Give Assurances as a Repudiation.........................................................................
- 5.9.11 Adequate assurances varies w/ commercial context and gravity of insecurity.
- 5.9.12 What is insolvency:
- (unilateral-contract or bilateral Contract where P fully performed). 5.9.13 Exceptions to general rule that repudiation operates as total breach – unilateral obligations
- 5.9.14 Debt Rule: Applies only if payment of money is the only thing due....................................
- 5.9.15 Diamond Rule
- 5.9.16 Hochster:
- 5.10 VI. DEFENSES...........................................................................................................................
- 5.10.1 IMPRACTICABILITY -
- 5.10.2 Doctrine of Impracticability
- 5.10.3 UCC 2-615/Modern Rule (Seller Statute):
- 5.10.4 Impracticable?
- 5.10.5 Three Part Test:........................................................................................................
- 5.10.6 Types of Basic Assumptions
- 5.10.7 Remedies available:
- 5.10.8 Technological advancements.................................................................................................
- 5.10.9 Force Mejeure Clause in Contract –
- 5.10.10 Temporary and Partial Impracticability.................................................................................
- than 10x cost). perform to the extent practicable unless the burden of performance would be substantially increased (greater
- 5.10.12 Temporary Impracticability Under the UCC (Ex. Two week embargo)...............................
- 5.10.13 Partial Impossibility Under the UCC.....................................................................................
- 5.10.14 Impracticability of Manner of Performance vs. Actual Performance.
- 5.10.15 Delivery - Exception to perfect tender rule...........................................................................
- 5.10.16 Payment.................................................................................................................................
- 5.10.17 Payment After Delivery.........................................................................................................
- 5.11 B. FRUSTRATION - Buyer Defense......................................................................................
- 5.11.1 In General..............................................................................................................................
- 5.11.2 Elements.................................................................................................................................
- 5.11.3 Restitution After Discharge for Impracticability or Frustration............................................
- 5.12 REMEDIES.........................................................................................................................................
- 5.12.1 A. DAMAGES............................................................................................................
- 5.12.2 1. Goal and Measurement of Damages.......................................................................
- 5.12.3 2. General and Consequential Damages Must Be Foreseeable...................................
- 5.12.4 Sale of Goods.........................................................................................................................
- 5.12.5 Seller's Non-Delivery / Buyer’s Cover..................................................................................
- 5.12.6 Seller's Breach of Warranty...................................................................................................
- 5.12.7 Buyer's Breach.......................................................................................................................
- 5.12.8 Buyer's Liability for the Price After Acceptance or Destruction...........................................
- 5.12.9 Consequential and Incidental Damages in Sales Cases.........................................................
- 5.12.10 Employment Contracts:.........................................................................................................
- 5.12.11 Construction Contracts..........................................................................................................
- 5.12.
- 5.12.13 d) Contracts to Sell Realty...........................................................................................
- 5.12.14 (a) English Rule—
- 5.12.15 (b) American Rule— bare majority..............................
- 5.12.16 3. Certainty..................................................................................................................
- 5.12.17 Protection of Reliance Interest—...........................................................................................
- 5.12.18 Rental Value of Profit 0 0 1 Emaking Property...............................................................................
- 5.12.19 Value of an Opportunity.........................................................................................................
- 5.12.20 4. Mitigation................................................................................................................
- 5.12.21 5. Present Worth Doctrine...........................................................................................
- 5.12.22 6. Liquidated Damages................................................................................................
- 5.12.23 7. Limitations on Damages..........................................................................................
- 5.12.24 8. Failure of Essential Purpose....................................................................................
- 5.12.25 9. Punitive Damages—Only if breach is mingled with an independent tort...............
- 5.12.26 10. Mental Distress........................................................................................................
- 5.12.27 11. Nominal Damages...................................................................................................
- 5.12.28 12. Efficient Breach Theory..........................................................................................
- 5.13 B. RESTITUTION....................................................................................................................
- 5.13.1 1. Goal of Restitution..................................................................................................
- 5.13.2 2. When Is Restitution Available?...............................................................................
- 5.13.3 Seven Contractual Situations:...................................................................
- 5.13.4 3. The Plaintiff Must Offer to Return Property...........................................................
- 5.13.5 Exceptions:.............................................................................................................................
- 5.13.6 a) Equitable Action......................................................................................................
- 5.13.7 4. Defendant's Refusal to Accept an Offered Return...................................................
- 5.13.8 5. Measure of Recovery...............................................................................................
- 5.13.9 3 Views re Effect of K Rate on Restitution Recovery:..........................................................
- 5.13.10 6. No Restitution After Complete Performance..........................................................
- 5.13.11 7. Election of Remedies...............................................................................................
- speculative)................................................................................................................................................. 5.13.12 8. Specific Restitution—Ordered where legal remedy = inadequate (when the damages are
- 5.14 THIRD PARTY BENEFICIARIES..................................................................................................
- 5.14.1 Concepts and Categories........................................................................................................
- 5.14.2 Promisor’s Defenses..............................................................................................................
- 5.14.3 Defenses from the Third Party beneficiary Contract.............................................................
- 5.14.4 When Rights Vest...................................................................................................................
- 5.14.5 Counterclaims:.......................................................................................................................
- 5.14.6 Promisee’s Defenses Against the Beneficiary.......................................................................
- 5.14.7 Cumulative Rights of the Beneficiary...................................................................................
- 5.14.8 Rights of the Promisee Against the Promisor........................................................................
- 5.15 ASSIGNMENT
- 5.15.1 Assignment of Rights—A Three Party Transaction..............................................................
- 5.15.2 UCC Coverage:......................................................................................................................
- 5.15.3 Deviants from the Norm........................................................................................................
- 5.15.4 Gratuitous Assignment:..........................................................................................................
- 5.15.5 Voidable Assignment:............................................................................................................
- 5.15.
- 5.15.7 iii) Assignment of a future right.............................................................................................
- 5.15.8 Non-Assignable Rights:.........................................................................................................
- 5.15.9 When Assignment Materially changes…:.............................................................................
- 5.15.10 Article 2 / Second Restatement –
- 5.15.11 Contractual authorization of an assignment will be honored................................................
- 5.15.12 Anti-Assignment clauses:......................................................................................................
- 5.15.13 Option Contracts:...................................................................................................................
- 5.15.14 Bilateral Contract...................................................................................................................
- 5.15.15 Requirements Contracts.........................................................................................................
- 5.15.16 Output Contracts....................................................................................................................
- 5.15.17 Defenses and Counterclaims of the Obligor Against the Assignor........................................
- 5.15.18 Defenses:................................................................................................................................
- 5.15.19 English Rule:--First to give notice to obligor get the assignment.........................................
- 5.15.20 New York Rule: First in time is first in right........................................................................
- 5.15.21 Four Horsemen: First in time wins........................................................................................
- 5.15.22 Rights of the Assignee Against the Assignor.........................................................................
- 5.15.23 Express Warranties or Disclaimers of Implied Warranties.......................
- 5.15.24 Implied Warranties....................................................................................
- 5.16 DELEGATION...................................................................................................................................
- 5.16.1 What is a Delegation?............................................................................................................
- 5.16.2 Liability of The Delegant.......................................................................................................
- 5.16.3 Liability of the Delegate........................................................................................................
- 5.16.4 Non-Delegable Duties............................................................................................................
- 5.16.5 UCC § 2-210 / Restatement second. Delegation of assurances; assignment of rights..........
- 5.17 X. DISCHARGE.......................................................................................................................
- 5.17.1 Discharge of Contractual Duties:
- 5.17.2 Methods (discussed elsewhere).............................................................................................
- 5.17.3 Mutual Rescission..................................................................................................................
- 5.17.4 Executory Accord / Substituted Agreement / Unilateral Accord...........................................
- 5.17.5 Accord and Satisfaction (page 29).........................................................................................
- 5.17.6 Substituted Contract...............................................................................................................
- 5.17.7 Novation.................................................................................................................................
I. MUTUAL ASSENT—OFFER AND ACCEPTANCE.
A. MUTUAL ASSENT.
Lonergan v. Scolnick : D trying to sell some land quickly. Made offers to several people. P thought they had a deal but there never was one. D manifested an intent not to be bound [until some further assent was given]. Rule: there can be no contract unless the minds of the parties have met and mutually agreed upon some specific thing. {also good case for form letters, ads, circulars….}.
1. Objective Theory of Contracts
Objective theory—reasonable person test. Superior knowledge : if the party has superior knowledge the standard is what a reasonable person with that knowledge would be bound to.
2. Intending Legal Consequence. - The parties needn't intend legal consequences to be legally bound. - No intent to be bound F 0 E 0 no contract. - some courts will enforce a contract where it is unfair not too (promissory estoppel) [& quasi-K] - Groups presumed not to be Bound: - Social invitations are not binding - Husband and wife (while living amicably) allowance agreement 3. Intent to Formalize Agreement - Agreement not to be bound unless and until sign formal agreement F 0 E 0Not bound until that time. - If writing is just intended to be a convenient memorial F 0 E 0Parties are bound. - Things to look for: - Reservation of the right not to be bound - Partial performance - Essential terms - Magnitude of transaction Intent is often a question of fact.
Winston v. Mediafare Entertainment Corp: P was go between for two contracting companies. P wanted brokers fee. Two sides almost had a deal but reserved the right not to be bound until they were ready to sign a contract. Rule: There is no binding contract if the sides do not intend to be bound by a preliminary agreement or a verbal agreement reached.
Quibbling over language does not show the intent to give up the right to be bound by written document only
4. Missing or Open Terms - Contract for sale of goods does not necessarily fail for indefiniteness if one or more terms are missing. If parties have intended to contract and there is reasonably certain basis for appropriate remedy, the court can use gap-fillers.
B. OFFER
1. What Constitutes an Offer? Objective Standard.
Lucy v. Zehmer: D offered to sell farm to P. D asserted he was joking. P did not know. Sued for specific performance. Rule: Both parties must be of a like mind to form a contract. The Offeree is not responsible for the offeror’s secret intention.
If there is the appearance of a contract and one party did not understand that the offer was made in jest, and if was reasonable to believer it was a serious agreement, there is a contract because cts. Will look to outward manifestations not secret intentions.
- (^) It is possible, but very unusual, to have a non 0 0 1 Epromissory offer. [reverse unilateral K’s] 2. What Is/Is Not a Promise/Offer?
A promise is a manifestation of intent that gives an assurance (commitment) that a thing will or will not be done. Not Offers :
- Preliminary negotiations
- Expressions of opinion, words of reassurance: {reasonable person test, has Doctor made promise or stated opinion?}
- Inquiries or invitations: {“I could not possibly sell unless I got $10,000 cash}
- Statements of intention: {Intentions or hopes not offers}
- Ads, Catalogues, Circular Letters:
Craft v. Elder & Johnston Co.: P saw a sewing machine advertised for $26. She tendered money store refused to give her one. RULE: an ordinary newspaper ad is not an offer, it is an offer to negotiate, an offer to receive offers or an offer to chaffer.
a. Ads can be offers sometimes if specific as to:
- (^) **Who offer is to
- Quantity [quantity term]
- Price b. Smokeball Case—Ads looking to unilateral K’s are valid (They are made to potential OE’s as opposed to the general ad for retail sale that merely invitation to potential OR’s to bargain]**
- Price Quotations: {usually intention to sell at a given price, NO quantity term = NO offer}
- [Distinguish from quotes in response to inquiry for an offer (Fairmount Glass)]
- If estimator is expert, may invoke equitable estoppel (Briggs)
- Offer at Auction: {“with reserve” auctioneer free NOT to accept [since bids are only the offer]. “Without Reserve” goods may be withdrawn until first bid is made. Both cases bidder is free to withdraw bid before hammer falls. A bid terminates all previous bids}
- Preliminary Negotiations: {any communications before operative offer.} 3. Types of Contracts.
Unilateral— offeror makes a promise, offeree does not. Bilateral— Both parties make promises.
Reverse Unilateral —Offeror (Insured) performs & requests promise from offeree (Insurer). Offeree then makes promise. {Insurance companies—for payment of premium, company promises to pay in the event of fire, theft, death ...} Series of Unilateral contracts— Offer is continually good for each time performance is done, until offeror revokes. Between Husband and Wife— Generally held to not be contracts as parties did not intend legal consequences.
- Exception : N.Y. Domestic Relations Law : above are held to be contracts if they are fair at time of creation, and not unconscionable at time to be fulfilled and notarized. Illegal Bargain— its formation or performance is criminal, tortious or contrary to public policy.
- Illegal Bargains are unenforceable. Contract of Adhesion— Most contracts we encounter are adhesions contracts. Enforceable if fair and reasonable. Estimates— Normally do not have legal effect unless the person holds himself out as an expert. How long Contract is good for? — If not provided for, terminable at will. At Will Employment— Employer may fire for good cause or no cause. May not fire for bad cause.
C. ACCEPTANCE
General:
- An offer looking to a unilateral contract asks for a performance.
- Common Law: offer to a unilateral contract may not be accepted by a promise.
- Offeree does not become bound when starting to perform the act requested by an offer in a unilateral contract [Must be clearly unilateral and then
- RS 2d §45 —Beginning of performance makes the offer irrevocable and is conditioned upon OE completing performance in a reasonable time]
- An offer looking to a bilateral contract invites a promise.
- CL: offer to a bilateral contract may not be accepted by performance. [But if indifferent it may be accepted by beginning performance subject to timely notification: See below]
- May be accepted by express or implied promise.
- UCC/Restatement: may be accepted by any reasonable means.
- Ambiguous Offer: general view is that it looks to Bilateral Offer.
- UCC & Restatement (Second) : Changed common law rules. [See §2.206] UCC 2-206: Offer & Acceptance in K Formation: (1) Unless unambiguously indicated (which is difficult to prove) by the language or circumstances (a) inviting acceptance in any manner and by any medium reasonable in the circumstances; (b) an order or other offer to buy goods for prompt or current shipment shall be construed as inviting acceptance either by a prompt promise to ship or by the prompt or current shipment of conforming or non-conforming goods, but such a shipment of non-conforming goods does not constitute an acceptance if the seller seasonably notifies the buyer that the shipment is offered only as an accommodation to the buyer. (2) Where the beginning of a requested performance is a reasonable mode of acceptance, an OR who is not notified of acceptance within a reasonable time may treat the offer as having lapsed before acceptance. 1. Relationship to Offer
- The offer creates the power of acceptance in offeree.
- The acceptance creates a contract and terminates the power of revocation that the offeror ordinarily has.
- The acceptance must be a voluntary act. 2. Acceptance by Authorized Party
3. Knowledge of Offer
Unilateral Contracts: a. Traditional View : the offeree must know of the offer in order to accept.
Broadnax v. Ledbetter: Reward posted for capture and return of criminal. P did so, but did not know of the offer at the time. Could not collect reward. Rule: notice or knowledge of the existence of the offer of a reward required when the recapture was made, is essential to the right to recover.
If performer finds out about offer after partially performing and completes performance with knowledge of offer, P is entitled to the reward [under the modern view; older view says knowledge req’d when performance began].
b. Modern View: knowledge of offer at any time before performance is complete F 0 E 0Contract.
Bilateral Contracts: the rule that the offeree must know of the offer may come into conflict with the objective theory of contracts. If so, the objective theory prevails.
- Possible for OE to accept w/o knowing of the offer under the Objective Theory. 4. Intent to Accept
- Unilateral contract: offeree must subjectively intend to accept. The offer need not be the principal inducement for performing the act.
- Restatement (Second) (more objective) intent to accept is presumed unless the offeree disclaims intent.
- An offeree to a bilateral contract can accept even if he or she has no subjective intent to accept; all that is required is an outward manifestation of intent to contract. [Cross-offers may not be mutual assent] 5. Necessity for Communication of Acceptance
Common Law: To create a bilateral contract, the offeree' s promise must be communicated to the offeror or his or her agent.
Fujimoto v. Rio Grande Pickle Co : P worked for D. D gave P a raise and a contract. P signed but never returned the contracts. Contracts found to be valid. No express way of accepting. Rule : The court held that the contracts were valid , as no specific language in the contract called for the return of the signed portion of the contract
Mode of acceptance is of little consequence as long as the offeror knows of the acceptance by the offeree. If method not specified, look for any clear/unmistakable overt manifestation that lets OR know of intent to accept (objective theory)
- offeror may dispense with the need for communication by manifesting such an intent.
- Offeror as master of offer may dispense with need to communicate acceptance.
Late Acceptance is… a. classic view: An offer which can only be accepted by a communication b. Another: OR may waive lateness if OE accepts in what OE believed to be a reasonable time. c. Restatement 2 nd: OR must notify OE of non-acceptance if OE sent in what OE believed is a reasonable time. Failure to object may F 0 E 0Contract.
6. Necessity of Notice in Unilateral Contract - Unilateral contract arises on performance. - Three views on whether the offeree must give notice:
a. Majority: Not required unless requested by the offer. [] Carill v. Carbolic Smoke Ball Co: Responding to ad (that WAS deemed an offer) P used D’s product, got sick and sued for collection of the money offered. Rule: proper procedure for accepting a contract that on its face has no need to make specific acceptance is performing the task set forth an notifying only if necessary.
Performance of conditions set forth in ad can be acceptance in certain situations..
b. Exception/ Restatements 1 st^ and 2nd^ : If OE knows the OR has no means of getting notice, failure exercise reasonable diligence in giving notice discharges the offeror from liability, unless the offeror learns of performance within a reasonable time or the offeror expressly or by implication indicates that notification is not necessary. [Exception to General rule: K may be formed by if no notification given, OR discharged]
- Offeror has duty to inquire unless inquiry is not feasible.
c. Minority : This view is the same as the second view except that no contract is consummated unless and until notice of performance has been sent. [DC view: Allows revocation until notice given]
d. Minority (NY view) : No notification necessary unless OR explicitly provides for it.]
7. Acceptance of an Offer Looking to a Series of Contracts - Series of Ks vs. Series of Performances is matter of Interpretation (reasonable person test).. - If an offer looks to a series of contracts, a contract arises each time the offeree accepts. - As to the future, the offer is revocable unless the offer is irrevocable. - Whether an offer looks to one or a series of acceptances is a question to be determined under the reasonable person test. Care must be taken to distinguish an offer looking to a series of acceptances from an offer looking to one acceptance with a number of performances. 8. Acceptance by Silence
General rule : silence ≠ acceptance of an offer or a counteroffer. Exceptions : a. Reason to Believe : OR has given the offeree reason to believe silence is acceptance and offeree intends by silence to accept [OR] creates ambiguity thus subjective intent admissible]. b. Mutual agreement : silence will operate as consent; c. Course of dealing —
- Where silence is deceptive, there is a duty to speak b/c OE created ambiguity; thus subjective intent inadmissible.
Hobs v. Massasoit Whip Co: P sent eel skins to D. D, as in past, remained silent. On this occasion D did not use skins and let them rot. P sued D. Rule: Ct held that silence is consent in the face of a preexisting relationship, and no action to the contrary by the receiving party.
d. Services : offeree accepts services with reasonable opportunity to reject them, and should reasonably understand that they are offered with expectation of payment.
- If medium of communication is reasonable, acceptance is effective when sent even if lost or delayed.
- Likely to be reasonable if same medium used by offeror. {unless otherwise expressly specified}
- Offeror may negate Mail Box rule by expressly stating that acceptance is good upon receipt.
- Unreasonable means of acceptance or failure to take proper care in transmitting (e.g. incorrectly addressed): if used acceptance is good upon receipt if offer is still open. [Subject to UCC and RS exceptions above] 12. Prescribed Method of Acceptance
Master of the Offer : If the offer prescribes an exclusive method of acceptance (courts reluctant to find such exclusivity), no contract arises if the offeree utilizes another means of acceptance even if the acceptance comes to the attention of the offeror.
13. Parties in the Presence of One Another - Offer only open while parties are face-to-face (unless otherwise indicated) - Acceptance is inoperative unless the offeror hears or is at fault in not hearing unless offeree knows or has reason to know that the offeror has not heard. 14. Withdrawal of Acceptance - Even if the offeree is able to regain possession of the letter pursuant to postal regulations, the letter of acceptance is effective.
Morrison v. Thoelke : Land to be sold between two parties. There was mailed acceptance the next day a phoned in rejection. Rule: Ct held that simply because one had the ability to intercept the mail did not give one the right to repudiate the acceptance.
Offeror is better person to bear the burden of the lapse in time between when offeree accepts and the offeror is notified. {Offeror is already willing to be committed [and closes deal quickly]}
15. Offeree sends both acceptance and Rejection
1 st^ Sent 2nd^ Sent 1 st^ Received 2nd^ Received Effect R A R A No K, but Counter Offer. R A A R K A R R A R1st^ =K OR relies on R, then OE estopped from claiming K. R2nd^ =may be Offer to Rescind or Repudiation. Lost or Delayed Acceptance: Majority Rule : Mail Box Rule applies to lost or delayed acceptance. Restatement R 2nd^ : OR not in breach unless OR receives notice from OEthat there is a contract.
Intercepting the mail does not give one the right to repudiate the acceptance.
16. Risk of Mistake in Transmission by an Intermediary
The mistake is made by an intermediary; {e.g. a telegraph company}/ Received buy garbled or otherwise incorrectly transmitted. Majority view: Operative as transmitted, unless the other party knows/has reason to know of the mistake. Minority view: No K if the offer or acceptance is not the message authorized by the party. The one who hires the intermediary is not liable for its negligence.
- Liability of Intermediary: injured party has a cause against the Intermediary. {they generally limit their liability}
D. TERMINATION OF REVOCABLE OFFERS
A revocable offer may be terminated in a variety of ways
1. Lapse of Time - (^) Terminated after the lapse of time specified in the offer. - Usually this time is measured from the time the offer is received (not counting partial days ). - If the acceptance is delayed and offeror has reason to know it, acceptance should be measured from the date it should have been received. - If no time is specified, the offer is open for a reasonable time. - Reasonable time is generally a question of fact. - Depends on: if transaction is speculative, manifest purpose of offeror. - Restatement 2nd^ adds whether or not offeree is acting in good faith.
a. Face to Face Offer
- Offer made where there are direct negotiations (e.g. face to face, telephone) the offer is deemed, in the absence of a manifestation of a contrary intention, to be open only while the parties are conversing.
- Offer can be kept open by offeree reserving rights {e.g. I’ll take it under advisement}
b. Termination Upon Happening of a Particular Event [Ex. “Subject to prior sale”]
- True even if the offeree does not know of the occurrence of the event.
c. Effect of a Late Acceptance Three views
- late acceptance is an offer which can be accepted only by a communicated acceptance.
- The original offeror may treat the late acceptance as an acceptance by unilaterally waiving the lateness.
- If late acceptance is sent in what could be considered to be a reasonable time, the original offeror has a duty to reply within a reasonable time.
- Failure to do so creates a contract by silence. {Duty to speak because it is not clear to offeree acceptance is late.} 2. Death of Offeror
Majority View : If the offeror dies between the making of the offer and the acceptance, the offer is terminated.
- This holds even if the offeree is unaware of the offeror's death. Minority View: death terminates the offer only if the offeror is aware of it. 3. Incapacity of Offeror
Majority Rule : Where the property of the offeror is placed under guardianship, any unaccepted offer made by the offeror is terminated.
The promise to pay does not fulfill the performance end of the contract. Unilateral contract relies on the performance not acceptance of the offer.
- Preparation is not performance.
b. Equal Publication
- Offer made to a number of persons whose identity is unknown to the offeror (e.g. a reward offer in a newspaper), the offer may be revoked by giving equal publication of the revocation as was given to the offer. [Constructive Notice] - Same medium, same size, same running date….
- If the offeror knows of the identity of a person who is taking action on the offer, the offeror must communicate the revocation to that person.
c. Indirect Revocation
- OE acquires reliable information from a 3 rd^ party that the OR has engaged in conduct that would indicate to a reasonable person that the offeror no longer wishes to make the offer.
- Information is reliable only if it comes from a reliable source and is in fact true. Must be objectively and subjectively reliable. - Objective = true - Subjective = from a reliable source.
- Unreliable source may be ignored
- Limitations of the doctrine:
- First Restatement limited it to cases involving sale of land and specific chattel.
- Restatement Second removed these limitations.
d. Revocation of an Offer Looking to a Unilateral Contract
- Three Views :
- Traditional (obsolete) can be revoked at any time before complete performance.
- Wilshire Doctrine —Bilateral contract is formed upon the beginning of performance.
- Modern/prevailing view—Option K formed once the offeree starts to perform or tenders performance. Marchiondo Case.
- OE not obligated to complete performance, but cannot claim offeror’s performance without completing in a reasonable time.
- If OR repudiates after OE begins, OE has COA and need not complete.
- This rule requires the actual beginning or tender of performance and not merely preparation. Extensive preparation for performance might, however, trigger a finding of promissory estoppel. [ RS 2d §45 reference RS 2d §90 ]
- Preparation v. Performance: under 3 rd^ view, offer is irrevocable only if offeree has started to perform. Preparation is not enough. (applies to second view as well) NOTE: Promissory Estoppel : Prep for performance by offeree may create right to relief under this theory. 6. Death or Destruction
- Death or destruction of a person or thing essential for the performance of the offered contract terminates the offer. 7. Supervening Illegality
- If, between the making of the offer and the acceptance, a change of law or regulations renders the proposed contract illegal, the offer is terminated. 8. Rejection or Counter-Offer
Common Law-- OE's power of acceptance is terminated by a rejection or a counter 0 0 1 Eoffer unless the offeror or the offeree manifests a contrary intention.
Rejection / Counter-Offer / Offer of Additional Terms by offeree UCC § 2- Restatement second : Applies UCC § 2-207 to non SOG contracts Common Law —Mirror Image Rule still applies.
A rejection is a statement by the offeree that he or she does not wish to accept the offer.
- A rejection is effective when it is received. A counter 0 0 1 Eoffer is a response to the offer that adds qualifications or conditions.
- A counter 0 0 1 Eoffer acts as a [implicit] rejection even if the qualification or condition relates to a trivial matter (ribbon matching, or mirror 0 0 1 Eimage, rule). [Test is whether OR considers the offer open]
- (^) A counter 0 0 1 Eoffer, in turn, can be accepted. Counter—Offer Distinguished From Other Communications A counter 0 0 1 Eoffer must be distinguished from other “requests”: A makes B offer to sell object at $100. Counter-offer.
- I’ll pay $
- Terminates the offer.
- Later attempted acceptance is ineffective. Counter 0 0 1 Einquiry ,
- Will you take $80?
- Does not terminate offer. Comment upon the terms ,
- The Price is too high
- Comment on the terms, not a rejection. Request for a modification of the offer,
- Send Lowest cash price
- Not a rejection Acceptance coupled with a request for a modification of the contract,
- I accept, but would appreciate 5% discount
- Requests or suggests addition of term to modify contract "Grumbling assent" that falls short of dissent,
- I accept but this is a bad deal for me. Acceptance plus a separate offer,
- I accept, please also ship one hand saw at the list price
- Contract. this is a separate offer not a counter-offer. Future acceptance.
- General contractor accepts subcontractors bid only if General gets the contract.
- Parties not presently bound.
- Once future event occurs both parties are bound. No need for additional manifestation to contract. If an acceptance contains a term that is not expressly stated in the offer but is implied therein there is an acceptance and not a counter 0 0 1 Eoffer.
- I accept if you can convey good title.
- Good title is implied, so there is acceptance not counter-offer.
Common Law Mirror Image Rule: Rule that required acceptance’s terms to correspond exactly with the offer’s terms in order for a contract to be formed.
- last person to send additional or different terms before delivery got their terms.
