Contracts Exam Organization

Pre-condition while learning doctrine, start sketching out fact patterns that trigger the specific doctrine Essay Planning while reading the exam fact pattern, mark in the margins where the facts seem to trigger certain doctrines

Will any of the parties claim that there was NOT an agreement?

Yes

No

Begin the essay with formation doctrine analysis

Will any of the parties claim that the contested promise is NOT enforceable?

Yes

Begin/continue the essay with consideration doctrine analysis

(1) Bargained for consideration (71) (2) Promissory Estoppel (90) (3) Enforced in Recognition of Past Benefit (86)

Yes

Will any of the parties claim that the contested promise is NOT enforceable?

No

No

RE-READ THE FACT PATTERN TO FIND WHAT YOU MISSED!!!

Essay will contain substantial element of enforceabil ity analysis

Essay will be limited to formation doctrine analysis

Organize by issue and focus on evaluating the communications, not the parties: What will each party say about the communication?

Formation Doctrine Analysis

Finding a Bargain Agreement
State the goals of the relevant parties:
e.g.: A wants to enforce an obligation to pay, and B does not want to pay. Evaluate the first (next) communication in terms of whether it is an offer

Relate these goals to the formation doctrine in a general fashion:

e.g.: A claims that X constituted an agreement that obligated B to pay for Y reasons; B claims that there was no agreement State the offer doctrine: An offer is a manifestation of willingness to enter into a contract. In deciding whether to characterize a particular communication as an offer, courts look at: 1) whether the words and circumstances indicate a present willingness to agree, without the need for further negotiation; 2) the amount of detail in the terms; 3) the number of people to whom the offer is addressed; and 4) any relevant local practices or conventions and they consider a couple of general rules. State the applicable acceptance doctrine: An acceptance is a manifestation of willingness to enter into the exchange as offered. In deciding whether to characterize a communication as an acceptance, courts look at whether the manner and content of acceptance is conforms to the manner and content indicated by the offer. Exceptions and limitations to this rule are recognized Describe what an acceptance would look like to satisfy the manner and content specified by the offer. State the applicable requirements of UCC 2-207: The Uniform Commercial Code replaces the common law mirror image rule in the case of sale of goods, in that it imposes different standards when the communication includes terms that are different from or in addition to the terms of the offer. There is a completely separate flow chart for this analysis, but it necessarily starts with discussing whether there has been a definite and seasonable expression of acceptance and whether both parties are merchants under UCC 2-104.

No Yes

Can this communication be characterized as an offer?

Is there another communication which may be considered an offer?

Yes

No
No agreement is likely to be found

No

Is this a contract for goods?

Yes
State the common law mirror image rule: At common law, the mirror image rule is typically applied to acceptance: an acceptance must mirror the offer in every way and be provided in the manner specified by or allowed by the offer. However, should the court take a more modern approach to acceptance, they will recognize four exceptions to the mirror image rule: (1) the change or addition only clarifies existing or implied terms in the offer, (2) the change or addition is only a request, (3) the change or addition is a grumbling acceptance, and (4) the change or addition is insignificant. Evaluate the next communication in terms of whether it is an acceptance Can this communication be characterized as an acceptance?

Yes
Is there another communication which may be considered an acceptance?

No

No

No agreement is likely to be found

Yes - go to Ensuring the Agreement is Valid

Formation Doctrine Analysis

Ensuring the Agreement is Valid
State the goals of the relevant parties with respect to the agreement:
e.g.: Because the court is likely to find an agreement [on what topic], B can still claim that the agreement is invalid for Y reasons. A will continue to assert that there was a valid agreement.

State the applicable termination doctrine:

Does the fact pattern suggest a possibility of termination or revocation

Yes

No

No

Is it likely that the agreement been terminated or revoked?

Contract may terminated by any of the four following occurrences: (1) Rejection or counteroffer by the offeree (2) Revocation of the offer by the offeror. At common law, offeror was free to revoke to offer at any time prior to acceptance. Modern trend in U.S. law is to develop certain exceptions to the common law tradition (3) Lapse: The general rule is that an offer lapses at the time specified in the offer or, if no time is specified, then after a reasonable time. (usually three months) (4) death of the offeror or offeree. Evaluate the agreement in terms of the termination doctrine

Does the fact pattern suggest a possibility of indefiniteness

Yes Yes
State the Indefiniteness doctrine:
Two approaches to indefiniteness in modern contract law. (1) Courts should not write terms into an agreement in order to enforce the agreement. (2) Courts should not refuse to enforce an agreement that was seriously made. The latter approach allows the Court to evaluate whether the agreement (a) demonstrates a serious intent of both parties to be bound by its terms and (b) contains or allows a way to fashion a remedy for the indefinite term(s). Past conduct of the parties and industry norms can be considered in evaluating those to factors. Evaluate the agreement in terms of the indefiniteness doctrine

No

No

Is it likely that the agreement is too indefinite to enforce?

Does the fact pattern suggest a possibility of misunderstanding

Yes Yes

State the applicable misunderstanding doctrine:

(1) A misunderstanding regarding important terms of their agreements because neither party had reason to know of the others understanding nor a duty to ensure the other party properly understood the terms. Therefore, no contract existed. (e.g. Konic). (2) According to an outside observer test, one party has an idiosyncratic understanding of the agreement that the other party could not have known about. (e.g. Acedo) In (1) or (2), if one party knew of the others misunderstanding and attempted to take advantage of it, that is a snatch up and results in the contract being enforced according to the innocent partys understanding. (3) A misunderstanding was deliberately intended by the format of an advertisement. A reasonable person would have misunderstood it in the fashion that it was presented. If the mistaken agreement were not enforced, one party would have disproportionately benefited from the misrepresentation. (e.g. Izadi) Evaluate the agreement in terms of the misunderstanding doctrine

No
Yes Proceed w Analysis
Does the fact pattern suggest a consideratio n issue? Is it likely No that a misNo understand ing will Yes change the terms or prevent an agreement ?

DONE

Consideration Doctrine Analysis

Finding Bargained for Consideration
If continued from a formation doctrine analysis, transition to the concept of consideration by referencing the agreement and clearly identifying the contested promise
Does the promise appear to be given in exchange for a return promise or for performance?

State the goals of the relevant parties:

e.g.: A states that the contested promise is not enforceable for X reasons, and B states that the same promise is enforceable for Y reasons.

State the doctrine regarding bargained for consideration:

In order to be legally binding, a promise must be given in exchange for bargained for consideration, which is defined as a return promise or performance that sought and given in exchange for a promise. Normally, the court will not inquire into the adequacy of the consideration; however, courts often inquire into the sufficiency of the consideration. Therefore, consideration may not be deemed adequately bargained for if the return promise or performance fulfills a pre-existing duty, is illusory, or is nominal.

Promise

Performance
Evaluate the return promise with respect to whether it can be considered a serious promise seriously made in circumstances that a reasonable person would understand as such. Evaluate the return performance with respect to whether it was induced by the promise (would not have been done save for the promise). The timing of the performance can be a significant factor in determining whether it was induced by the promise.

Yes
Promise is likely to be enforced

Could the court find that the promise is enforceable due to bargained for consideration?

No

Next Page: Alternate reasons to enforce a promise (other than bargained for consideration)

Consideration Doctrine Analysis

Finding Another Reason to Enforce the Promise
Start from either: Failing to find an agreement (but still seeking to enforce the promise) or Failing to find bargained for consideration to support a valid agreement.
Are there facts that show the promisee received a past benefit?

Restate the goals of the relevant parties:

e.g.: A states that the contested promise is not enforceable, and B states that the same promise is enforceable.

No No

Yes

Are there facts that show that the promise may be enforced due to reliance?

Yes

Yes

No
Promise is not likely to be enforced Is the past benefit a prior contractual obligation that is currently inoperable?

Could the court find that the promise is enforceable due to reliance? Promise is likely to be enforced Is the past benefit a prior restitutionary obligation?

State the reliance doctrine:

RST Sec. 90 Promise Reasonably Inducing Action or Forbearance: A promise which the promisor should reasonably expect to induce action or forbearance on the part of the promisee or a third person and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise. The remedy granted for the breach may be limited as justice requires Evaluate the promise in terms of whether it has been relied upon. Discuss RST Sec 86: Recent general doctrine that justice requires a promise in recognition to be enforceable even though it is not given in exchange for bargained for consideration, provided that (1) the past benefit not a gift, (2) the promise has not unjustly enriched the promissee and (3) the value of the promise not disproportionate to the past benefit. In this context, gift cannot mean what it means in a restitutionary context. Evaluate the promise in terms of Sec 86 doctrine.

No

No

Yes
State the traditional moral consideration doctrine: A promise to fulfill a prior contractual obligation that has been made inoperable by law (such as expiration of statute of limitations, infancy, bankruptcy, etc) is enforceable even though it is not given in exchange for bargained for consideration. Evaluate the promise in terms of traditional moral consideration doctrine.

Yes
State the expanded moral consideration doctrine: A promise to fulfill a prior restitutionary obligation is enforceable even though it is not given in exchange for bargained for consideration. Evaluate the promise in terms of expanded moral consideration doctrine.

Promise is not likely to be enforced except under restitution doctrine

No

Could the court find that the promise is enforceable in recognition of a past benefit?

Yes
Promise is likely to be enforced

Post-Contract Formation Analytical Scheme

If the hypothetical fact pattern does not have writing, that is a Statute of Frauds issue. If the hypothetical fact pattern does have writing, that is a parol evidence rule issue. The two issues will NOT appear at the same time.

The exchange agreement isnt enforceable

Concede that the contract can be enforced

Restrictions on power to contract: Illegality, violation of public policy, statutes of fraud Market misconduct or error: Duress, undue influence, misrepresentation, failure to disclose, mistake of fact If all else fails: Unconsionability 1. Implied term based on course of performance, course of dealing or trade usage. 2. Implied contract obligation of best efforts, good faith or fair dealing (especially when contract allows one party to exercise discretion) 3. Parol evidence shows that the writing does not represent the entire agreement (supplemental oral terms agreed to prior to or contemporaneous with the writing) 4. Ambiguity of express terms Characterization of the term Condition - parties set up the agreement so that an event must occur for an obligation to arise. Condition must be strictly fulfilled. Constructive condition - Court has characterized terms as dependent promises therefore substantial performance by one party is conditioned upon substantial performance by the other party Promissory condition - parties set up the agreement so that one party must make an event occur for the other partys obligation to arise. Frustration of purpose: changed circumstances eliminate the payees reason for wanting the other partys performance Impossibility/impracticability: changed circumstances eliminate the performers ability to fulfill his obligation to the payee 1. New consideration means that both parties gave up or promised something more 2. Even if there was no new consideration, the modification was fair and equitable in view of an unanticipated change (RST 89D) 3. For the sale of goods, even though there was no new consideration, the modification was made in good faith and enforceable (UCC 2-209)

The term that is being claimed to have been breached is not part of the agreement

Concede that the term is part of the agreement

Even if that term is part of the agreement that doesnt mean it was an obligation
Concede that there is an obligation

Something has happened since the making of the agreement that excuses performance
Concede that the obligation still exists

Even though we initially agreed to that term, it has since been modified