I. WHAT IS A CONTRACT?

A. 1. CONTRACT DEFINED
i. A contract is a promise or a set of promises for the breach of which the law gives a remedy, or
ii. the performance of which the law in some way recognizes as a duty.
B. 2. PROMISE; PROMISOR; PROMESEE; BENEFICIARY
i. "Promise" - a 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.
ii. "promisor" - the person manifesting the intention
iii. "promisee" - the person to whom the manifestation
iv. "beneficiary" - where performance will benefit a person other than the promisee
C. 3. AGREEMENT DEFINED; BARGAIN DEFINED
i. "Agreement" is a manifestation of mutual assent on the part of two or more persons.
ii. "Bargain" is an agreement to exchange promises/performances.
D. 4. HOW A PROMISE MAY BE MADE
i. A promise may be stated in words either oral or written, or may be inferred wholly or partly
from conduct.
II. WHAT LAW GOVERNS THIS SUIT?
A. GENERAL
i. UCC
ii. Common Law
B. UCC ARTICLE 1 & 2
i. 2-201. SCOPE: CERTAIN SEC. & OTHER TRANSACTIONS
1. Transactions in goods- i.e. sale of movable tangible goods.
ii. 2-105(1) DEFINITIONS: TRANSERABILITY; "GOODS"
1. "Goods": Tangible and movable things at the time of identification to the contract for sale.
iii. 2-106 DEFINITION: K, AGREEMENT, K FOR SALE, SALE, PRESENT SALE:
1. "Sale": The passing of title from the seller to buyer for a price.
2. "Merchants": One who regularly deals in goods of the kind sold or who otherwise by his
profession holds himself out as having special knowledge or skills as to the practices of
goods involved.
C. Major diff. from RST:
i. Firm Offer Rule
ii. 2-207
iii. Need New consideration to modify a common law contract but if sale of goods all you need
writing.
D. COMMON LAW
i. Anything not goods

E. WHAT IF "MIXED" GOODS/SERVICE CLAIM?
i. Predominate Factor Test (Majority Rule)
1. Whether their predominate factor, the THRUST, the purpose, of contract is sale or goods,
then apply applicable law.
2. Factors they look at to decide what's predominant: Money, The primary reason to hire the
person they hired (Ex. Joe Blow v. a specialist).
ii. Pittsley v. Houser: She didn't like the carpet.
1. They ruled the carpet was more predominant than the services and applied U.C.C.
iii. Severance Test (Minority Rule)
1. Allows the contract to split while the goods involved would be covered by UCC and non-
goods by the common law.
2. Minority b/c can get confusing and messy.
III. WHAT IS THE ROLE OF POLICY IN CONTRACT LAW?
A. WHEN CAN THE COURT FIND A CONTRACT VOIDABLE BECAUSE IT IS AGAINST PUBLIC
POLICY?
i. It is only when a given policy is so obviously for or against the public health, safety, morals, or
welfare that there is a VIRTUAL UNANIMITY of opinion in regard to it that a court may
constitute itself as "Voice of the Community" in declaring such a policy void.
1. NOTE: "Against Public Policy" isn't the same as "illegal." It's LEGAL to enter into such K
voluntarily, but the courts won't enforce it.
2. CONTRAST: contract to sell "meth" = ILLEGAL
ii. Shaheen v. Knight --- "The blessed event."
1. Sterilization issue is not unanimous so not against policy.
2. However, allowing for damages for the "blessed event" of birthing and raising a healthy
child is against public policy.
iii. Baby "M" ---- I changed my mind No you cant buy my baby!
1. A child being "sold" is similar to slavery and both are against public policy, thus, suing
over retraction of adoption is against public policy.
B. WHAT BEHAVIORS DOES CONTRACT LAW INCENTIVIZE OR DISCOURAGE?
i. RELIANCE- Mutual benefits of an increase in wealth. If people trust each other they will be
more likely to enter into agreements and further the growth and wealth of the country.
ii. AVOID CONFLICT- Uncertainty. To enforce promises and hold promisor's responsible. Thus,
preventing non-breachers from retaliation while promoting them to spend money.
C. WHAT VALUE DOES CONTRACT LAW SEEK TO PROTECT?
i. Freedom to Contract: Courts are hesitant to interfere with contracts because you have right to
enter into whatever agreements you chose. The will enforce contracts and only void if against
public policy or illegal.
ii. Increase efficiency: Make one person (or both) better off than they were before.
IV. WHAT REMEDIES DOES THE P WANT FROM THE LAWSUIT?
A. DAMAGES: A sum of money intended to compensate for the HARM done to the promisee's interests caused by
the promisor's failure to perform.
i. EXPECTATION (MOST COMMON): Gives the promisee the $ value she would have received if the
promise had been carried out.
1. Hawkins v. McGee Harry Hand Rule: (Guarantee "100 percent good hand")
a. Difference between the value of what he was promised and the value of the hand he
received.
b. Plus incidental losses.
2. 347. MEASURE OF DAMAGES IN GENERAL:
a. Subject to the limitations in 350-353, the injured party has a right to damages based
on expectation interest as measured by
i) the loss in the value to him caused by other party's failure or deficiency to
perform, PLUS
ii) any other loss, including incidental or consequential loss, caused by the
breach, LESS
iii) any cost or other loss that he has avoided by not having to perform.
3. INCIDENTAL & CONSEQUENTIAL DAMAGES:
a. INCIDENTAL damages are extra cost incurred by the aggrieved party in dealing
with the breach. (i.e. reshipping an item)
b. CONSEQUENTIAL damages are losses arising as a consequence of the breach. (i.e.
lost profits, customers; injury to persons resulting from defective performance)
ii. RELIANCE DAMAGES (COMMON IN PROMISSORY ESTOPPEL)
1. Puts the promisee back in the position that she would have been in had the promise not been made.
iii. RESTITUTION DAMAGES (UNCOMMON)
1. Put the promisor in the position she would have been in had the promise not been made.
B. EXTRAORDINARY REMEDIES
i. SPECIFIC PERFORMANCE
1. An order from the court to the breaching party to perform.
2. When it is applied:
a. UNIQUE Land/ Real Property (i.e. home corner of 5th and May Ave.)
b. UNIQUE Goods (i.e. Signed original sketch by Picasso)
i) Rationale:
1) Uniqueness
2) Money damages would not make non-breaching party whole
3) Cannot just go out and get identical thing on market

3. 2-716. BUYER'S RIGHT TO SPECIFIC PERFORMANCE OR REPLEVIN
a. Spec. Perf. may be ordered where the goods are UNIQUE or in other proper
circumstances.
b. The Judgment for Spec. Perf. may include such terms and conditions as to payment
of the price, damages, or other relief as the court may deem just.
c. The buyer has a right of replevin for goods identified to the contract if after
REASONABLE EFFORT he is unable to effect cover for such goods OR the
circumstances reasonably indicate that such effort will be unavailing OR if the
security interest in them has been made or tendered.
ii. INJUNCTION
1. A court may refrain a breaching employee from working for a competitor throughout the duration of
the contract.
2. Granted if the employee is a person of EXCEPTIONAL SKILL or KNOWLEDGE and
ABILITY in performing the service, AND
3. Same service could NOT BE EASILY OBTAINED from another
4. Dallas Cowboys v. Harris---- UNIQUE SKILLS AND ABILITIES
a. "But I'm not unique!" because the dictionary term defines unique as "sole" or "the
only one" and I am not the only one.
b. COURT: Too narrow "unique" IF same service could not be easily obtained from
another in this case other people w/ skill set already signed w/ other teams.
V. MANIFESTATION OF MUTUAL ASSENT
(Offer + Acceptance + Consideration = Contract) Have these parties reached an agreement?
A. Was there Mutual Assent?-
i. TO ENFORCE K, PARTY SEEKING ENFORCEMENT MUST SHOW:
1. Objective Theory of Mutual Assent:
a. The promissor's expressed MANIFESTATION of intent (i.e. Objective
Manifestation), AND
b. The Promisee's ACTUAL BELIEF that the promissor meant what was expressed. (i.e.
Subjective Understanding)
ii. SATISFIED BY:
1. Objective Manifestation AND Subjective Understanding is Satisfied:
a. Would a reasonable person conclude the words and actions constituted an offer?
(Objective)
b. Did the party seeking enforcement ACTUALLY BELIEVE the wrongdoer assented to
terms? (Subjective)
iii. RULE OF SUBJECTIVE UNDERSTANDING
1. Embry v. McKittrick- "Go ahead, you're all right; get your men out and don't let that worry
you."
a. If the conduct is such that a REASONABLE person would BELIEVE that he was
AGREEING to the terms proposed by another party and that party UPON THAT
BELIEF ENTERS into the contract that man would be equally BOUND
REGARDLESS of SUBJECTIVE INTENT.
b. EXCEPTION if subjective or undisclosed INTENT is KNOWN to party seeking
enforcement, then K is NOT BINDING because he does not enter K "on the belief" so
NO MUTUAL ASSENT
iv. RULE OF OBJECTIVE MANIFESTATION:
1. Lucy v. Zehmer- "But I was joking!"
a. The WORDS and ACTIONS of the party are interpreted using a REASONABLE
PERSONSTANDARD.
b. If the words or acts of the wrongdoer have but ONE REASONABLE MEANING, his
undisclosed INTENTION is IMMATERIAL.
c. The court looks to the , OUTWARD EXPRESSION of a person and NOT to their
SECRET and UNEXPRESSED subjective intent. Would a reasonable person
conclude that the words and actions constituted an offer.
v. 17. REQUIREMENT OF A BARGAIN- (Mutual Assent + Consideration)
1. Except as stated in Subsection (2), the formation of a contract requires a bargain in which
there is a MANIFESTATION OF MUTUAL ASSENT AND CONSIDERATION.
2. Whether or not there is a bargain a contract may be formed under special rules applicable
to formal contracts or under the rules stated in 82-94.
vi. 18. MANIFESTATION OF MUTUAL ASSENT-
1. Manifestation of mutual assent to an exchange requires that EACH PARTY either make a
PROMISE or begin or render a PERFORMANCE.
vii. 19. CONDUCT AS MANIFESTATION OF ASSENT
1. The manifestation of assent may be made wholly or partly by WRITTEN or SPOKEN
words or by other ACTS or by FAILURE TO ACT.
2. The conduct of a party is NOT EFFECTIVE as a manifestation of his assent UNLESS the
party INTENDS to engage in the conduct and knows or has REASON TO KNOW that the
OTHER PARTY may INFER from his conduct that he ASSENTS.
3. The conduct of a party may manifest assent even though he does not in fact assent. In such
cases a resulting contract may be VOIDABLE because of fraud, duress, mistake, or other
invalidating cause.
VI. WAS THERE AN OFFER?
An offer creates a power of acceptance in the offeree and a corresponding liability on the part of the offeror.
i. 22. MODE OF ASSENT: OFFER AND ACCEPTANCE
1. The manifestation of mutual assent to an exchange ordinarily takes the form of an offer or
proposal by one party followed by acceptance by the other party or parties.
2. A manifestation of mutual assent may be made even though neither offer nor acceptance
can be identified and even though the moment of formation cannot be determined.
ii. 24. OFFER DEFINED:
1. Offer is [ MANIFESTATION OF IMMEDIATE WILLINGNESS TO ENTER BARGAINS ], so
as to JUSTIFY another person to believe his assent is invited; thus, completing the bargain.
B. WHAT CONSITUTES AN OFFER?
i. It must create a reasonable expectation in offeree that the offeror is willing to enter into a K on basis of
offered terms.
ii. AN OFFER MUST BE:
1. Clear, definite, and explicit, and
2. Leaves nothing open for negotiation
a. Specific Terms: who offer is to, quantity, price, etc.
3. Must be reasonable to assume offer
4. Objective manifestation of offeror must justify the reasonable belief of the offeree
iii. LOOK AT 2 FACTORS TO HELP:
1. Content
a. Was there certainty and definiteness in the essential terms?
b. Were all of the Essential Terms present?
2. Communication (Objective REASONABLE PERSON Test)
a. Was communication reasonable to believe offeror intended to enter in contract?
b. By the content AND (2) setting reasonable to believe offer
iv. Communications that are NOT Offers:
1. Preliminary Negotiations
2. Request for Bids
3. Advertisements
4. Invitations to make and offer
5. Invitation to trade
6. Statement of price
C. IS IT AN OFFER OR PRELIMINARY NEGOTIATIONS?
i. 26. PRELIMINARY NEGOTIATIONS:
1. A MANIFESTATION of willingness to enter into a BARGAIN is NOT an offer IF the person
to whom is addressed KNOWS/REASON TO KNOW that the person making it does NOT
INTEND to conclude a bargain UNTIL he has made FURTHER manifestation of assent.

ii. 33. CERTAINTY:
1. Even though a manifestation of intention is intended to be understood as an offer, it cannot
be accepted so as to form a contract unless the terms of the contract are reasonably certain.
2. The terms of a contract are reasonably certain if they provide a basis for determining the
existence of a breach and for giving an appropriate remedy.
3. The fact that one or more terms of a proposed bargain are left open or uncertain may show
that a manifestation of intention is not intended to be understood as an offer or as an
acceptance.
iii. PRELIMINARY NEGOTIATIONS LACK:
1. Lack Reasonably Certain terms to contract, MUST:
a. provide a basis for determining the existence of a breach AND
b. for giving an appropriate remedy.
2. Party shows NO INDICATION of a present intent to be legally bound
a. Often if lacks one or more essential terms shows lack of intent
iv. INVITATION TO NEGOTIATE----LACK OF DEFINITE TERMS
1. Nebraska Seed v Harsh-
a. General Adv. Letter for seed lacking definite quantity & buyer
b. RULE: TO CONSTITUTE AS AN OFFER THE COMMUNICATION MUST BE
SPECIFIC.
c. Harsh not indicative of a present intent to be legally bound.
d. If a proposal is nothing more than an invitation to make an offer, it is not such an
offer that can be turned into an agreement by acceptance. These are just invitations
to trade.
e. Such inquiries may lead to bargains, but do not make them.
D. ADVERTISEMENTS
i. Generally: An advertisement is usually not an offer. They are generally thought to be
invitations to make an offer.
1. HOWEVER, if the ad is so explicit, clear, definite, and leaves nothing open for negotiation.
Its an exception to the rule.
2. Must be reasonable to assume an offercant be joke/outrageous
ii. ADVERTISEMENT & CATALOG----OBJECTIVE REASONABLE PERSON TEST
1. Leonard v PepsiCo- "I'm getting a Harrier Jet from PepsiCo Catalog for only 7,000,000
points!"
2. RULE: A ADV. IS ONLY AN OFFER IF REASONABLE PERSON WOULD CONSIDER IT
ONE.
3. An objective reasonable person would consider a jet for $7,000,000 Pepsi points to be in jest
4. Adv. Commercial is NOT clear, definite, explicit because it is referring to a catalog.
5. Whether an offer made dep. on objective reasonableness of offerees belief that the
advertisement was intended to be an offer.
iii. ADVERTISEMENT OFFER EXCEPTION----WHOM OFFER IS ADDRESSED
1. Leftkowitz v Great Minn Surplus- "3 Mink Coats-- First Come First Serve $1
a. RULE: ADV FOR SALE OF GOODS IS AN OFFER WHEN IT IS CLEAR, DEFINITE,
AND EXPLICIT, AND LEAVES NOTHING OPEN FOR NEGOTIATION.
b. DIFFERENT: Offer to FIRST THREE TO ARRIVE--it is clear to whom offer is
addressed.
iv. 29. TO WHOM AN OFFER IS ADDRESSED:
1. The manifested intention of the offeror determines the person or persons in whom is
created a power of acceptance.
2. An offer may create a power of acceptance in a specified person or in one or more of a
specified group or class of persons, acting separately or together, or in anyone or everyone
who makes a specified promise or renders a specified performance.
E. AGREEMENTS TO AGREE-- When are they Contracts?
i. 27. EXISTENCE OF K WHERE MEMORIAL CONTEMPLATED
1. Manifestations of assent that are in themselves sufficient to conclude a contract will not be
prevented from so operating
2. by the fact that the parties also manifest an intention to prepare and adopt a written
memorial thereof;
3. But the circumstances may show that the agreements are preliminary negotiations.
ii. Determined by:
1. Actions and Words OBJECTIVELY
2. The more SPECIFIC the better
3. Must have ALL ESSENTIAL TERMS agreed upon
4. If objectively, actions show an intent to be bound
a. i.e. press release, arrangements with finances to pay
5. Subject to can often show an intention to NOT be bound
iii. Empro v Ball- valve component sale subject to board approval
1. Intent in contract law is evaluated by an objective standard. If it says subject to it shows
their intent not to be bound.
iv. Texaco v. Penzoil- I accept your offer!! Actually never mind!
1. All of the essential terms were agreed upon including price, amount, ownership
2. Whether the complexity or magnitude such that formal writing expected
3. Court looks at intent, the letter was sent, then counteroffer, the counteroffer was
ACCEPTED, press release about merge
F. UCC APPLICATION TO OFFER: (**Biggest diff. is NO INTENT needed)

i. 2-204. FORMATION IN GENERAL
1. A contract for sale of goods may be made in any manner sufficient to show agreement,
a. including conduct by both parties which
b. recognizes the existence of such a contract.
2. An agreement sufficient to constitute a contract for sale may be found even though the
moment of its making is undetermined
3. Even though one or more terms are left open, a contract for sale does not fail for
indefiniteness if:
a. the parties have intended to make a contract; AND
b. there is a reasonably certain basis for giving an appropriate remedy
ii. 2-206. OFFER AND ACCEPTANCE IN FORMATION OF K
1. Unless indicated by language or circumstances
2. an offer to make a contract is construed as inviting acceptance in any manner by any medium
reasonable in the circumstances;
3. an order or other offer to buy goods for prompt or current shipment is 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
4. such a shipment of non-conforming goods does not constitute an acceptance IF
a. seller seasonably notifies the buyer that the shipment is offered only as an
accommodation to the buyer
5. If acceptance by starting performance is a reasonable mode --- an offeror not notified within a
reasonable time may treat offer as having lapsed before acceptance.
iii. 2-305. OPEN PRICE TERM
1. The parties if they so intend can conclude a contract for sale even though the price is not
settled. In such a case the price is a reasonable price at the time for delivery IF
a. nothing is said as to price; or
b. the price is left to be agreed by the parties and they fail to agree; or
c. the price is to be fixed in terms of some agreed market or other standard as set or
recorded by a third person or agency and it is not so set or recorded.
2. A price to be fixed by the seller or by the buyer means a price for him to fix in good faith.
3. When a price left to be fixed otherwise than by agreement of the parties fails to be fixed
through fault of one party the other may at his option treat the contract as cancelled or himself
fix a reasonable price.
4. Where, however, the parties intend not to be bound unless the price be fixed or agreed and it
is not fixed or agreed there is no contract. In such a case the buyer must return any goods
already received or if unable so to do must pay their reasonable value at the time of
delivery and the seller must return any portion of the price paid on account
iv. 2-308. ABSENCE OF SPECIFIED PLACE FOR DELIVERY
1. Unless otherwise agreed:
a. sellers place of business is place for delivery of goods OR if not place or business
his residence; BUT
b. in contract for sale of identified goods which to the knowledge of the parties at the
time of contracting are in some other place, that place is the place for their delivery;
AND
c. documents of title may be delivered through customary banking channels
v. 2-309. ABSENCE OF SPECIFIC TIME PROVISTIONS; NOTICE OF TERMINATION
1. Time for shipment or delivery if no other time has been agreed on is a reasonable time
2. Termination by a party requires reasonable notification be received by the other party
vi. 2-310. OPEN TIME FOR PAYMT OR RUNNING OF CREDIT; AUTH. TO SHIP U/
RESERVATION
1. Unless otherwise agreed
2. payment is due at the time and place at which the buyer is to receive the goods even though
the place of shipment is the place of delivery; AND
3. if the seller is authorized to send the goods he may ship them under reservation, and may
tender the documents of title, but the buyer may inspect the goods after their arrival before
payment is due unless such inspection is inconsistent with the terms of the contract (Section
2-513); AND
4. if delivery is authorized and made by way of documents of title otherwise than by
subsection (b) then payment is due at the time and place at which the buyer is to receive the
documents regardless of where the goods are to be received; AND
5. where the seller is required or authorized to ship the goods on credit the credit period runs
from the time of shipment but post-dating the invoice or delaying its dispatch will
correspondingly delay the starting of the credit period.
VII. THE POWER OF ACCEPTANCE & REVOCATION:
A. Definitions
i. 35. THE OFFEREE'S POWER OF ACCEPTANCE
1. An offer gives to the offeree a continuing power to complete the manifestation of mutual assent
by acceptance of the offer.
2. A contract cannot be created by acceptance of an offer after the power of acceptance has been
terminated in one of the ways listed in 36.
ii. 36. METHODS OF TERMINATION OF THE POWER OF ACCEPTANCE
1. An offerees power of acceptance may be terminated by:
a. rejection or counter-offer by the offeree; or
b. lapse of time; or
c. revocation by the offeror; or
d. death or incapacity of the offeror or offeree.
2. In addition, an offerees power of acceptance is terminated by the non-occurrence of any
condition of acceptance under the terms of the offer.
B. POWER OF THE OFFEROR
i. Die
ii. Revoke / withdraw
1. Offer not kept open without consideration
2. Revocation effective at moment notification is received by offeree
3. Notification can be direct or indirect communication
iii. REVOCATION OF AN OFFER VS. OPTION CONTRACT
1. Dickson v Dodds - "I will hold house open for you to decide...Oops, out of luck I sold it!
a. An open offer to sell terminates when the offeree learns that the offeror has already
agreed to sell to someone else.
b. Acceptance is meaningless if the offer no longer exists.
2. 42. REVOKING BY COMM. FROM OFFEROR REC. BY OFFEREE
a. An offerees power of acceptance is terminated when the offeree receives from the
offeror a manifestation of an intention not to enter into the proposed contract.
3. 43. INDIRECT COMMUNICATION OF REVOCATION
a. An offerees power of acceptance is terminated when the offeror takes definite action
inconsistent with an intention to enter into the prosed contract AND
b. the offeree acquires reliable information to that effect.
iv. LIMITATIONS on Revocation
1. Option Contract (Common Law)
a. MUST have Manifestation AND Consideration
2. 25. OPTION CONTRACT
a. An option contract is
i) a promise ( 3 manifestation of mutual assent on the part of two or more
persons)
b. which
c. meets the requirements for the formation of a contract
i) (per 17, K formation requires a bargain in which there is
a) a manifestation of mutual assent AND
b) a consideration)
d. AND
i) limits the promisors power to revoke an offer.
3. 37 TERMIN. OF POWER OF ACCEPTANCE UNDER OPTION K
a. Notwithstanding 38-49, the power of acceptance under an option contract is not
terminated by rejection or counter-offer, by revocation, or by death or incapacity of
the offeror, unless the requirements are met for the discharge of a contractual duty.
v. FIRM OFFER (UCC)
1. 2-205. FIRM OFFERS
a. REQUIREMENTS?
i) An offer
ii) by a merchant
iii) to buy or sell goods
iv) in a signed writing which
v) gives assurance that it will be held open
vi) AND - if offeree's form - term separately signed by offeree
b. RESULT?
i) Then the offer is not revocable for lack of consideration
c. LIMITATIONS OR EXCEPTIONS?
i) (not revocable) during the time stated OR A REASONABLE TIME --
ii) BUT
1) Not to exceed 3 months.
C. POWER OF THE OFFEREE
i. 4 TYPES
1. Acceptance
2. Rejection
3. Counter Offer
4. Terminate from Lapse Through Time
ii. ACCEPTANCE
1. In a bilateral contract the offeree must COMMUNICATE ACCEPTANCE to the offeror
BEFORE it is binding.
2. the acceptance must be clearly communicated
3. to be effective the acceptance must be clear and unequivocal (leaving no doubt)
4. the offeror controls the manner of acceptance
5. The offer and acceptance must MIRROR each other
iii. COUNTER OFFER & "MIRROR IMAGE RULE"
1. If the reply to an offer is CONDITIONED on the additional terms, and therefore a REJECTION of
the ds offer
a. Mirror: the language of acceptance and the offer must be the same
i) mere inquiry" is not a counter offer
b. If additional considerations are present this is a counter-offer and requires
acceptance by the original offeror before a contract exists.
c. If conditional language exists the only way for a valid contract is if the acceptance is
clearly independent of the condition
d. STILL ACCEPTANCE IF
i) Mere inquiry- If contract is accepted and also a further inquiry not
conditioned for the acceptance
ii) Acceptance plus a NEW offer
2. THE MIRROR IMAGE RULE
a. Ardente v Horan- buying a house accept but want you to throw in the tapestries
i) An acceptance must be definite and unequivocal to be effective. The terms of
the letter conditioned acceptance upon the inclusion of the tapestries and
other items. An acceptance may not impose additional conditions on the offer
or add limitations.
ii) If additional considerations are present this is a counter-offer and requires
acceptance by the original offeror before a contract exists.
iii) If conditional language exists the only way for a valid contract is if the
acceptance is clearly independent of the condition
3. 61. ACCEPTANCE THAT REQUEST CHANGE OF TERMS
a. An acceptance which requests a change or addition to the terms of the offer is not
thereby invalidated
b. UNLESS
i) the acceptance is made to depend on an assent to the changed or added terms.
D. ACCEPTANCE- MANNER AND MEDIUMS
1. In What MANNER & MEDIUM should an Offeree Notify an Offeror of Acceptance?
ii. MANNER OF ACCEPTANCE
1. The offeror can state the manner of acceptance
2. Often offer does not specify how to accept so you may choose any medium reasonable in
the circumstances.
3. Acceptance by: Performance; Promise; Silence
4. 30. FORM OF ACCEPTANCE INVITED
a. A offer may
b. invite or require acceptance to be made
i) by an affirmative answer in words, or
ii) by performing or refraining from performing a specified act, OR
c. may empower the offeree to make a selection of terms in his acceptance.
d. Unless otherwise indicated by the language or the circumstances, an offer invites
acceptance in any manner and by any medium reasonable in the circumstances
5. 32. INVITATION OF PROMISE OR PERFORMANCE
a. In case of doubt an offer is interpreted as inviting the offeree to
b. accept either by promising to perform what the offer requests OR
c. by rendering the performance, as the offeree chooses.
6. 45 OPTION K CREATED BY PART PERFORMANCE OR TENDER
a. Where an offer invites an offeree to accept by rendering a performance and does not
invite a promissory acceptance, an option contract is created when the offeree
tenders or begins the invited performance or tenders a beginning of it.
b. The offerors duty of performance under any option contract so created is
conditional on completion or tender of the invited performance in accordance with
the terms of the offer.
7. 19. CONDUCT AS MANIFESTATION OF ASSENT
a. The manifestation of assent may be made wholly or partly by written or spoken
words or by other acts or by failure to act.
b. The conduct of a party is not effective as a manifestation of his assent unless:
i) he intends to engage in the conduct; AND
ii) knows or has reason to know that the other party may infer from his conduct
that he assents.
8. 62 EFFECT OF PERFORMANCE BY OFFEREE
a. Where an offer invites an offeree to choose between acceptance by promise and
acceptance by performance, the tender or beginning of the invited performance or a
tender of a beginning of it is an acceptance by performance.
b. Such an acceptance operates as a promise to render complete performance.
9. NOTE: DIFFERENCE B/T 45 AND 62 IS:
a. 45Offer specifies acceptance by perf.start of perf. Creates OPTION but offeree
can still revoke (not offeror)
b. 62 Offer does NOT specify promise or perf. Acceptance start of perf. Is an
ACCEPTANCE which operates as a promise to COMPLETE PERFORMANCE
offeree cannot revoke.
10. 54 ACCEPTANCE BY PERF.; NECESSITY OF NOTICE TO OFFEROR:
a. (1)Where an offer invites an offeree to accept by rendering a performance, NO
notification is necessary to make such an acceptance effective unless the offer request
such a notification.
b. In an offeree who accepts by rendering a performance has reason to know that the
offeror has no adequate means of learning of the performance with reasonable
promptness and certainty, the contractual duty of the offeror is discharged unless:
i) the offeree exercises reasonable diligence to notify the offeror of acceptance, or
ii) the offeror learns of the performance w/in a reasonable time, or
iii) the offer indicates the notification of acceptance is not required



iii. ACCEPTANCE BY PERFORMANCE
1. The manner of acceptance by offeree is determined based on the form required by the
offeror
2. If impossible to notify of acceptance then completing performance is acceptable
3. Carbolic Smoke Ball-
a. Carbolic indicated that they were serious by the deposit in the bank. (an affirmative
action that proves it was more than mere puff)
b. This was a unilateral offer that could not be accepted by promise. Offeree accepted it
by performing the requested action.
iv. ACCEPTANCE BY SILENCE (Very uncommon)
1. When is it allowed?
a. Usually only applied to sale of goods
b. If offeree takes benefit of offered services
c. If prior dealings b/t parties
d. Offeror has reasonable expectation that silence rep. acceptance
e. Offeror has reasonable
i) If offeree does not intend to accept, must notify offeror
2. 69. ACCEPTANCE BY SILENCE OR EXERCISE OF DOMINION
a. Where an offeree fails to reply to an offer, his silence and inaction operate as an
acceptance in the following cases only:
i) Where an offeree takes the benefit of offered services with reasonable
opportunity to reject them and reason to know that they were offered with the
expectation of compensation.
ii) Where the offeror has stated or given the offeree reason to understand that
assent may be manifested by silence or inaction, and offeree in remaining
silent and inactive intends to accept the offer..
iii) Where because of previous dealings or otherwise, it is reasonable that the
offeree should notify the offeror if he does not intend to accept.
b. An offeree who does any act inconsistent with the offerors ownership of offered
property is bound in accordance with the offered terms unless they are manifestly
unreasonable. But if the act is wrongful as against the offeror it is an acceptance only
if ratified by him.
3. Hobbs v Massasoit Whip Co- eel skins
a. previous dealings between the parties can create the expectation with the offeror that
the silence of the offeree implies acceptance.
E. E-COMMERCE: CONTRACTING WITH THE WWW.
i. 3 TYPES OF E-COMMERCE AGREEMENTS:
1. SHRINKWRAP: wrapping that seals software which bind the consumer to the terms of the
agreement upon removal of the shrink-wrap.
2. CLICKWRAP: Users have to read terms and accept by clicking on a button that says "I
agree" or "I accept," BEFORE download
3. BROWSE-WRAP : Terms of use are listed on a web site page. They can be on page
downloading or a link to terms on page

ii. Elements of e-commerce contract:
1. Need Mutual Assent to form a K
2. Terms must be so obvious that upon download it cant be missed
3. Consumer clicking DL comm. assent ONLY IF offeror makes clear to consumer that
downloading means consent to terms
4. An offeree, regardless of apparent manifestation of assent, is NOT BOUND if assent
contained in a manner whose contractual obligation is unknown.
5. If it is conspicuous & found easily, most likely held accountable for contract.
iii. EXCEPTION
1. After the first DL, user is bound if aware of terms
2. If browse-wrap is so obvious it cant be missed
iv. Specht v Netscape- Scroll, click, another pg, THEN terms---assentright?
1. This is a browse wrap, the notification of terms was only visible if one scrolled down the
page, one could download without seeing the terms.
2. Not liable because one must have reasonable knowledge that the terms exist to assent to
them.
v. Register.com v Verio- Ha Ha I never clicked accept---Im not bound!!!
1. Verio was bound by the terms not because he downloaded them once but because they
downloaded multiple times a day and saw the terms many times
VIII. ENFORCEABILITY: Is this the type of agreement the law will enforce?
A. IS THE CONTRACT ENFORCEABLE?
B. DOCTRIN OF CONSIDERATION
i. What is Consideration?
1. Exchange in promises in which both parties are getting something out of it.
2. Consideration (or an alternative ) is required for enforcement of a K
3. Reason is to attempt to establish an enforceable vs. unenforceable contract.
ii. ELEMENTS
1. Bargain-for exchange between the parties
2. A detriment to promisee and/ or a benefit to promisor
iii. 71 REQUIREMENT OF EXCHANGE; TYPES OF EXCHANGE
1. To constitute consideration, a performance or a return promise must be bargained for.
2. A performance or return promise is bargained for if it is sought by the promisor in
exchange for his promise and is given by the promisee in exchange for that promise
3. The performance may consist of:
a. an act other than a promise; or
b. a forbearance; or
c. the creation, modification, or destruction of a legal relation.
4. The performance or return promise may be given to the promisor or to some other person.
It may be given by the promisee or by some other person.
iv. 17 REQUIREMENT OF A BARGAIN
1. Except as stated in subsection (2), the formation of a contract requires a bargain in which
there is a manifestation of mutual assent to the exchange and a consideration.
2. Whether or not there is a bargain, a contract may be formed under special rules applicable
to formal contracts or under the rules stated in 82-94.
v. SUMMARY OF RESTATEMENT APPROACH
1. A contract is an enforceable promise ( 1 and 3);
2. With some exceptions ( 17 (2)) A contract requires a
a. Bargain and
b. consideration. (17 (1)):
3. A promise is supported by consideration if it is bargained for. (71 (1));
4. A promise is bargained for
a. if it is sought by the promisor in exchange for his promise and
b. is given by the promisee in exchange for that promise. ( 71 (2))
C. WHAT IS CONSIDERATION?
i. Benefit to the promisor
ii. Detriment to the promissee
iii. Sought-for (performance)
1. Acts, forbearance, return promise to act or forbear
iv. Examples
1. DUTY-
2. forbearance - giving up legal right -RESTRICTED HIS LAWFUL FREEDOM OF ACTION
a. Hamer v. Sidway- uncle promise to pay if refrain from drinking, smoking, gamble until age
21 (but nephew was of legal age already to do those things)
3. Waiver of legal right constitutes as a detriment
4. Debts incurred by minors.
5. Prior debts-even if barred by statute of limitations
6. Debts of bankruptcy (If SOL has run out and then you promise to pay back. It counts).
7. Obligations which form consideration (Legal obligations) at one time or another.
8. Benefit previously rejected BY promisor FROM promisee to the extent necessary to prevent
injustices.
9. A new contract (modification) due to unforeseen circumstances.
D. APPROACHES TO CONSIDERATION
i. BENEFIT/DETRIMENT ANALYSIS
1. There must be a benefit to the Promisor and/or
2. A detriment to the promisee
3. A court will still use benefit/detriment analysis to determine if an act or promise was
bargained -for
ii. BARGAIN-FOR RESTATEMENT ANALYSIS
1. If it is sought for by promissor in exchange for promise, and
2. Given by promisee in exchange for promise
a. Dahl v. HEM Pharm- THE P incurred a detriment of being tested and HEM received the
benefit of testing their drugs on people = VALID CONSIDERATION.
E. WHAT IS NOT CONSIDERATION?
i. GIFTS/ GRATUITOUS PROMISE
1. The commitment to use funds to pay off pre-existing debt it not consideration because there
is no advantage to promisor and no detriment to promisee.
2. A promise to pay money AS A GIFT may be revoked at any time BEFORE PAYMENT.
(Johnson v. Otterbein)
a. Johnson v. Otterbein University: wrote note promising $100. It was a gratuitous promise
and they are only effective upon actual delivery of the thing that was promised.
b. Dahl v. Hem Pharmacy: Pharmacy company promised medication for a year in exchange for
being tested on. There was a detriment in time and discomfort= consideration.
ii. PAST CONSIDERATION
1. consideration executed (already completed) will not support a promise made at a later time
(Moore v. Elmore)
2. RST 71(1): To constitute consideration, a performance or return promise must be
bargained for.
3. Cannot sought something that has already happenedTHERE IS NO INDUCEMENT TO
PROMISE
a. 81 CONSIDERATION AS MOTIVE OR INDUCING CAUSE
i) The fact that what is bargained for does not of itself induce the making of a
promise does not prevent it from being consideration for the promise.
ii) The fact that a promise does not of itself induce a performance or return
promise does not prevent the performance or return promise from being
consideration for the promise.
4. Moore v. Elmer :
a. There is not valid consideration, because pay off of the mortgage was not sought in exchange
for the performance of the readings, this is past consideration
b. The attachment of the pay out of the mortgage after the fact is an example of past
consideration
c. There was already the performance of the sittings
i) Decedent would have had to promise first as well, because he wasnt seeking the
readings in exchange for relief of the mortgage
iii. PRE-EXISTING DUTY & CONTRACT MODIFICATION
1. Doing something you are already legally obligated to do is not consideration.
2. No new detriment
3. A promise to pay for work that is already contracted is not enforceable. (Alaska Packers)
4. Under common law. You need new consideration for contract modification. VS. NOT THE
RULE UNDER U.C.C. Which just needs writing to modify.
a. Stilk v. Myric: Seamen deserted mid-voyage.
i) There is no valid consideration, because the a pre-existing obligation is past
consideration and cant be used in the formation of a new agreement
ii) Part of the original agreement was to uphold the duties in the even that there
were deserters, which is common, so the sailors dont have anything left to
give that they werent already obligated to perform
b. Brian Construction and Development Co. v. Brighenti:
i) The modification of the contract was binding (even though technically there is
no consideration) because the unforeseen work constitutes the new
consideration
ii) Brian promised to pay more money to clear up debris that was not visible at
the time the original promise was made.
c. 89: MODIFICATION OF EXECUTORY CONTRACT:
i) A promise modifying a duty under a contract not fully performed on either
side is binding:
1) If the modification is fair and equitable in view of circumstances not
anticipated by the parties when the contract was made; or
2) To the extent provided by statute; or
3) To the extent that justice requires enforcement in view of material change
of position in reliance on the promise.
Modification of
Terms!!!!
d. Elements of 89 MODIFICATION:
i) Voluntary Promise
ii) Neither party has fully performed.
iii) Fair Equitable (Only enough to cover costs)
iv) Unanticipated Circumstances
5. UCC MODIFYING A CONTRACT:
a. An agr. modifying a K needs no consideration to be binding.
F. ADEQUACY OF CONSIDERATION
i. Law does not req. consideration be adequate, just that it be in proportion with what the parties
accepting are giving up
1. Pretend Exchange- such as a sham or nominal consideration does not satisfy the
requirement of RST 79.
2. Consideration that is worth nothing is not consideration.
a. 79 ADEQUACY OF CONSIDERATION
i) If the requirement of consideration is met, there is no additional requirements
of
1) gain, advantage, or benefit to the promisor or a loss, disadvantage, or
detriment to the promisee; or
2) Equivalence in the values exchanged; or
3) Mutuality of obligation
ii. MORAL CONSIDERATION:
1. Usually not sufficient consideration due to lacking the bargain-for element.
2. EXCEPTIONS:
a. DEBT BARRED BY TECHNICAL DIFFICULTIES
i) If past obligation would be enforceable except for the fact that a technical
defense to enforcement stands in the way, the courts will enforce a new
promise if it is either
1) In writing
2) Partially performed
b. MATERIAL BENEFIT RULE
i) A moral obligation is sufficient consideration to support a subsequent
promise to pay where the promisor has received a material benefit.
c. 86 only enforced to extent to prevent injustice
3. 86: PROMISE FOR BENEFIT RECEIVED
a. Benefit previously received by the promisor from the promisee will be enforced to
the extent necessary to prevent injustice.
b. A promise is not binding under Subsection (1)
i) if the promisee conferred the benefit as a gift or for other reasons the promisor
has not been unjustly enriched; or
ii) to the extent that its value is disproportionate to the benefit.
4. BENEFITS ALREADY RECEIVED
a. Debts of minor children
b. Obligations of a bankrupt entity
c. Debts that are now barred by the statute of limitations
d. Mills v. Wyman:
i) Someone took in the 's dying son and took care of him. promised to repay. There
is not a binding obligation because it does not fall under one of the exceptions
of promises to pay for benefits already received
e. Webb v. McGowan
i) saving mans life in exchange for your body. The D promised to pay him weekly
stipend but when D died his estate stopped the payment.
ii) A moral obligation is sufficient consideration for a MATERIAL BENEFIT
although there was no original duty or liability resting on the promisor.
G. HOW TO ESTABLISH CONSIDERATION?
i. First you look who is the promise breaker? Typically the .
ii. Second, did that promise breaker ask for anything in return for her promise? If not then no
consideration. If there was then there is consideration. (Hamer v. Sidway- Forbearance from
legal duties you are allowed to do then it's consideration)
1. Ex. Uncle says "Nephew I'm so proud, I'll give you $5000.00 when you turn 21. So nephew
is really good. No consideration. He was never asked to do that"
2. Detriment wasn't bargained for. ( 17)
iii. Say there was consideration, and it was bargained for. Look for Past consideration and pre-
existing legal duty.
1. RULE: In order for the promise to be consideration, it has to be reasonably believed in.
Consideration that is worth nothing is not consideration.
H. SUMMARY OF CONSIDERATION
i. Consideration
1. Waiver of legal right
2. Modification due to unforeseen circumstances
3. Past consideration to prevent injustice under section 86
4. Previous obligations
a. Debts of minors
b. Obligations of bankruptcy
c. Debts barred by the statute of limitations
ii. Not consideration
1. Pre-existing obligations
2. Gifts
a. Even conditional gifts
3. Past consideration
a. Unless encompassed under section 86
4. Sham consideration
a. Worth literally nothing
IX. ALTERNATIVES TO BARGAINED-FOR CONSIDERATION
A. PROMISSORY ESTOPPEL
i. benefit previously received BY promissor FROM promisee (to the extent necessary to prevent injustice)
Rest. 2d Contracts 86
ii. Elements of Promissory Estoppel
1. Promise
a. the content of the promise must be clear
b. the promise must be substantial and definite
c. the promisor reasonably anticipate that the promise will lead the promisee to act or
forebear.
2. Reliance
a. it is reasonable for the promisee to rely on the promise
b. the promisee actually relied on the promise
c. except charitable subscriptions and marriage settlements
3. Injustice
a. injustice can only be avoided by enforcement
b. damages limited to amount acted upon, not amount promised
iii. All about Induced Reliance
1. RULE: A promise can be enforced even if it was given without consideration if the
promisee has REASONABLY RELIED on the promise to her detriment.
2. 90 PROMISE REASONABLY INDUCING ACTION OR FORBEARANCE
a. (1) A promise which the promisor should reasonably expect to induce action; or
i) forbearance on the part of the promisee or a third person; and
ii) which does induce such action or forbearance is binding if
iii) injustice can be avoided only by enforcement of the promise the remedy
granted for breach may be limited as justice requires
b. (2) A charitable subscription or a marriage settlement is binding under subsection
(1) without proof that the promise induced action or forbearance.
B. EQUITABLE VS. PROMISSORY ESTOPPEL
i. Promissory Estoppel
1. Promisor makes a promise
2. Promisee changes position in reliance on the promise and
3. The change is to the detriment of the promisee
ii. Equitable Estoppel
1. There must be conduct acts, language, or silence amounting to a representation or
concealment of material facts
2. These facts must be known to the party estopped at the time of his said conduct, or at least
the circumstances must be such that knowledge of them is necessarily imputed to him
3. The truth concerning these facts must be unknown to the other party claiming the benefit of
the estoppel, at the time when such conduct was done, and at the time when it was acted
upon by him
4. The conduct must be done with the intention, or at least with the expectation, that it will be
acted upon by the other party, or under such circumstances that it is both natural and
probable that it will be so acted upon. There are several familiar species in which it is
simply impossible to ascribe any intention or even expectation to the party estopped that
his conduct will be acted upon by the one who afterwards claims the benefit of the estoppel
5. The conduct must be relied upon by the other party, and, thus relying, he must be led to act
upon it
6. He must in fact act upon it in such a manner as to change his position for the worse; in
other words, he must so act that he would suffer a loss if he were compelled to surrender or
forego or alter what he has done by reason of the first party being permitted to repudiate
his conduct and to assert rights inconsistent with it
iii. As a substitute for consideration, or an alternative to consideration:
1. precursor: Ricketts v. Scotthorn (Equitable Estoppel)
a. The doctrine of promissory estoppel serves as a substitute for consideration and in
this case is considered adequate to serve as consideration.
b. The granddaughter acted in reliance on the promise And this act was to her
detriment as a result of reliance on the promise
2. Feinberg v. Pfeiffer
a. Promissory Estoppel serves as a substitute for consideration because the plaintiff
b. Quit her job in reliance on the promise made by the defendant and
c. Suffered a detriment as a result of acting in reliance on that promise
d. This is the old rule, however, detriment, if any, will be used in evaluation of injustice
e. Promisor , defendant, had reason to believe that the plaintiff would act in reliance
iv. Family Promises
1. Rickets v. Scothorn- (Grandfather promises to give granddaughter $2000 because he felt she
should not have to work, he did not make her quit work. There is no consideration but the
promise is still binding because the promise was made in such a way that it suggested she
quit working. Thus it would be inequitable to not enforce the promise because
consideration is lacking.
2. RULE: A promise without consideration can be binding if the promisee has reasonably
relied on the promise to her detriment. This equitable estoppel case is a precursor to
promissory estoppel.
v. Promises to Convey Land
1. Greiner v. Greiner-(Mom promised 80 acres to son, he lived there and made improvements,
she then told him leave. The court said the promise is binding)
2. RULE: A promise which the promisor should reasonably expect to induce action or
forbearance and which does induce such action or forbearance is binding if injustice can be
avoided only by enforcement of the promise. The mom intended to keep the promise and
the son relied on it.
vi. Charitable Subscriptions
1. Allegheny College v. Bank of Jamestown- (Alumni promised to give money to college for a
fund in her name, but she then repudiated the promise before she died) Can enforcement of
a charitable subscription be squared with the doctrine of consideration as qualified by the
doctrine of promissory estoppel. Cardozo found for the college as the deceased had
already turned over $1000 and the college had already established the fund, which showed
their performance, Cardozo doesnt use detrimental reliance.
2. Under the detrimental reliance we could still find for the college because RS 90 (2) promises
of charitable donations do not need proof of inducement.
vii. Promises of a Pension
1. Feinberg v. Pfeiffer Co. ( Good employee we are gonna pay you for life when you decide
to retire.) An employer who promises a pension, inducing the employee to quit a lucrative
position in reliance on the pension is bound by their promise. Detrimental reliance was a
factor in determining injustice here.
viii. Construction Bids
1. Drennan v. Star Paving- Reasonable reliance may replace the need for consideration which
is normally required to make an offer binding.
2. When the defendant bid on the contract, he should have expected that the plaintiff would
place a bid relying on those amounts bid by the subcontractor.
3. The only way to remove the injustice is to enforce the promise made by defendant..
ix. 87 OPTION CONTRACT
1. An offer which the offeror should reasonably expect to induce action or forbearance of a
substantial character on the part of the offeree before acceptance and which does induce
such action or forbearance is binding as an option contract to the extent necessary to avoid
injustice.
C. Promissory Estoppel as an Alternative to Breach of Contract: Not a simple consideration substitute. A
new kind of claim.
i. Hoffman v. Red Owl: Hoffman wanted to open a red owl store. Red Owl kept changing the deal
and asking him for new promises. He justifiably relied on the promises multiple times to his
detriment. It would be unjust to deny remedy.
1. RS. 90 promissory estoppel can be applied even though the promise is not definite enough
to create a contract if there was consideration
2. RS. 90 just requires a promise that the promisor reasonably believes will be relied on, and is
relied on.
3. The definiteness of the promise can be a factor
a. A promise could be so vague that no one could expect it to be relied upon.
4. There is no mutual assent, because the terms of the deal were still too uncertain to
constitute an offer, thus no acceptance was possible.
5. Thus, the promissory estoppel does not serve as a substitute for consideration.
6. However, there is reliance at the detriment of the plaintiff and this is unjust not to hold the
promisor accountable
a. We want to keep people in check
b. Keep people who would attempt to back out of their promises
i) Keep morals in check
ii) Keep careless promisors from making these types of promises
7. There must be a significant relationship between
a. The reliance on the promise and
b. The detriment suffered by the promisee as a result of the reliance
8. There must also be good reason for the promisor to believe his words will be relied upon
9. In this case
a. The Red Owl agent had good reason to believe his words would be relied upon
b. There was a significant relationship between the reliance of Hoffman and the
detriment suffered by Hoffman as a result of the reliance on the Red Owl agent
c. Definiteness of promise can be a factor, as it could be so vague that no one could
reasonably rely upon it, but it doesnt require that there be an actual offer and
acceptance
ii. Illusory Promises
1. Promises that sound like they have value but may actually not have value.
iii. Establishing the Elements of Promissory Estoppel
1. Promise
a. Spooner v. Reserve Life Insurance
i) The promise necessary for promissory estoppel cannot be illusory
ii) Company promised to give bonuses, but said they could withhold them if
they felt like it
iii) Cannot depend on illusory promise for Estoppel
2. Reasonable Reliance
a. Alden v. Vernon Presley-mom of Elviss former girlfriend suing because Elvis said he would
pay off her mortgage, she went ahead with her divorce relying that Elvis was going to pay,
but he died.
b. To enforce a promise through promissory estoppel, the reliance must be reasonable.
c. Initial reliance was reasonable, but she had a chance to change the reliance without
detriment to herself.
i) I.E. she could have gotten the divorce decree modified because of a change in
circumstances
X. ARE THERE ANY DEFENSES?
A. Statutes to defer fraud. Concerned 's will come to court and fraudulent allege existent of a contract
when there was not one. We don't want the state to participate in the fraud. It's like a fence or barrier
to keep the plaintiff from getting in court. It's the possibility for to move for summary judgment on
the basis of the statute of frauds. Deserving plaintiff's can get around the fence.
i. Two questions you should be able to answer about the Statute of Fraud:
1. What contracts are within the Statute of Frauds
2. When do I have to worry about the statute of frauds?)
ii. RESTATEMENT 110 CLASSES OF CONTRACTS COVERED
1. The following classes of contracts are subject to a statute, the Statute of Frauds, forbidding
enforcement unless there is a written memorandum or an applicable exception
a. a contract of an executor or an administrator to answer for a duty of his decedent
(The executor-administrator provision)
b. a contract ot answer for the duty of another (The suretyship provision)
c. a contract made upon consideration of marriage (The marriage provision)
d. a contract for the sale of an interest in land (The land contract provision)
e. a contract that is not to be performed within one year from the making thereof (The
one year provision)
f. A contract for the sale of goods for $500 or more is covered by the UCC 2-201
B. THE SCOPE OF THE STATUTE
i. Laymans Terms What has to be in writing MYLEGS
1. Marriage
2. Year provison
3. Land
4. Executor
5. Goods over $500
6. Surety
ii. Klewin v. Flagship Properties- (D orally hired P to do construction on a 10 year project. D
became dissatisfied with P work and replaced him)
1. A contract is only within the scope of the SOF if by its terms it is impossible for it to be
fully performed within one year.
2. The SOF does not make an oral contract unenforceable unless it explicitly says by its terms
that the contract cannot be performed within a year.
3. The court thinks that the one year provision is pretty useless today but they lack the
authority to change it thus they must enforce it.
4. This case has a narrow scope
iii. Clark v. Larkin-
1. ( D wrote a check to buy property from P but stopped the payment saying the writing was
not sufficient because it had the street address for the property to be purchased but did not
list the city, state)
2. If the writing contains the names of the parties, the signature of the one to be charged(the
person challenging the existence of the contract) , the terms and conditions of the contract,
and a description of the property sufficient to render it capable of identification, then it
meets the writing requirement. The writing must be complete in and of itself but we can
use parol evidence to explain ambiguities.
iv. Crabtree v. Elizabeth Arden-
1. To satisfy the SOF the writing does not have to be contained in one document, but there
must be a reference in the signed writing to the unsigned sufficient to connect the two.
2. Oral testimony is admissible to show the connection between the documents, but
additional terms cannot be supplied by oral testimony.
C. Exceptions to the SOF
i. Boone v. Coe-
1. (Boone entered into a agreement with Coe that Boone would rent Coes farm for 12 months.
Coe was supposed to provide materials and Boone would build a barn and house. Coe
didnt and refused to allow Boone to cultivate land.)
2. Partial performances, dont recover on the contract, but recover for money paid by him, or
properly delivered, or services rendered in accordance with and upon the faith of the
contract.
3. Can only recover if could do so without express contract. It must appear that the defendant
has actually received, or will receive some benefit from the acts of partial performance.
4. Services rendered during the life on a promise for receiving something after the life of the
promisor. In this case the P merely sustained a loss.
5. D received no benefit. Had he received a benefit the law would have obliged him to pay.
6. Damages cannot be recovered for a violation of the contract within the SOF.
ii. RESTATEMENT 129 ACTION IN RELIANCE; SPECIFIC PERFORMANCE
1. A contract for the transfer of an interest in land may be specifically enforced
notwithstanding failure to comply with the SOF if it is established that the party seeking
enforcement, in reasonable reliance on the contract and on the continuing assent of the
party against whom enforcement is sought, has so changed his position that injustice can be
avoided only by specific enforcement.
iii. RESTATEMENT 130 CONTRACT NOT TO BE PERFORMED WITHIN A YEAR
1. Where any promise in contract cannot be fully performed within a year form the time the
contract is made, all promises in the contract are within the SOF until one party completes
his performance.
2. When one party to a contract has completed his performance, the one-year provision of the
SOF does not prevent enforcement of the promises of other parties.
D. Exceptions to SOF Goods
i. UCC 2-201 SALES CONTRACTS
1. Sale of goods $500 or more, must be signed by the party against whom enforcement is
sought, the writing is not insufficient because it misstates a term but it is not enforceable
beyond the quantity in writing.
2. between merchants within a reasonable time, confirmation is valid if the recipient has
reason to know what is in the confirmation, then it is valid unless an objection is sent
3. SOF doesnt apply when a. goods are specially manufactured and not suitable for sale to
others before repudiation is received, and there is an indication it is for the buyer
ii. ( Needs a substantial beginning in manufacture, b. party admits to contract (only enforceable to
the extent of the admission, c. goods have been paid for, or received and accepted.
iii. Riley v. Capital Airlines-
1. (Riley alleged a 5 year contract to supply water methanol to Capital Airlines. The P
attempted to argue that the doctrine of part performance removes the contract form the
SOF.)
2. Partial performance does not take an executory portion of a contract out of the SOF. But P is
entitled to recover reliance damages even where the remaining portion of the executory
contract is void under the SOF.
iv. Illustrations:
1. Oral agreement to buy and sell 1000 b Dry corn on sale at $3.
a. Clerk fills in purchase order but accidently puts 100b
b. 3 witnesses hear the parties agree to 1000b
c. Seller delivers 100b
d. Buyer protests
e. Result? Buyer only has to deliver 100b.
2. Farmer agrees to sell farm for $100000 including a $10000 down payment
a. Buyer gives farmer a $10000 check but check does not link itself to purchase of the
farm
b. Farmer cashes the check and refuses to deliver title and keys invokes the SOF
c. Result? SOF says that he cannot enforce the contract, but he can recoup money via
restitution
XI. Defenses Based on the Status of a Contracting Party
A. Capacity Defenses
i. RESTATEMENT 12 CAPACITY TO CONTRACT
1. No one can be bound by contract who has not legal capacity to incur at least voidable
contractual duties. Capacity to contract may be partial and its existence in respect of a
particular transaction may depend upon the nature of the transaction or upon other
circumstances
2. A natural person who manifests assent to a transaction has full legal capacity to incur
contractual duties unless he is
a. under guardianship, or
b. an infant, or
c. mentally ill or defective, or
d. intoxicated
B. Incompetence
i. RESTATEMENT 15 MENTAL ILLNESS OR DEFECT
1. A person incurs only voidable contractual duties by entering into a transaction if by reason
of mental disease or defect
a. he is unable to understand in a reasonable manner the nature and consequences of
the transaction or
b. he is unable to act in a reasonable manner in relation to the transaction and the other
party has reason to know of his condition
2. Where the contract is made on fair terms and the other party is without knowledge of the
mental illness or defect the power of avoidance under (1) terminates to the extent that the
contract has been so performed in whole or in part or the circumstances have so changed
that avoidance would be unjust. In such a case a court may grant relief as justice requires.
ii. Ortelere v. Teachers Retirement-
1. ( Wife of P her life insurance to allow no death payout but larger monthly checks but she
suddenly died and her husband sought to have her election void based on mental
incompetence.) The court said that the traditional cognitive standard fails on account of
one who by reason of mental illness is unable to control their conduct even though their
cognitive ability seems unimpaired.
2. RULE: Contracts of a mentally incompetent person are voidable. This is a policy decision
to protect certain individuals from themselves.
C. Infancy
i. RESTATEMENT 14 INFANTS
1. Unless a statute provides otherwise, a natural person has the capacity to incur only
voidable contractual duties until the beginning on the day before the persons 18th
birthday.
ii. Rule on Infancy: Contracts entered into by minors are voidable unless:
1. for necessities and other statutory exceptions: insurance, educational loans, banking,
military enlistments
2. benefit received unjustly (may be voidable but must give the stuff back)
3. express ratification
4. ratification by conduct
5. failure to disaffirm within a reasonable time after reaching age of majority
iii. General Rule: One may rescind or disaffirm contracts made while a minor
1. *Policy: protecting youth from being young and dumb
iv. Kiefer v Fred Howe Motors-
1. (Married minor contracts and defaults on a car loan.) A contract entered into by a minor is
voidable unless it is for certain things (see list above)
XII. Defenses Based on Flaws in Mutual Assent
A. Misrepresentation

i. RESTATEMENT 159 MISREPRESENTATION DEFINED
1. A misrepresentation is an assertion that is not in accord with the facts.
ii. RESTATEMENT 162 WHEN A MISREPRESENTAION IS FRAUDULENT OR MATERIAL
1. A misrepresentation is fraudulent if the maker intends his assertion to induce a party to
manifest his assent and the maker
a. knows or believes that the assertion is not in accord with the facts, or
b. does not have the confidence that he states or implies in the truth of the assertion, or
c. knows that he does not have the basis that he states or implies for the assertion
2. A misrepresentation is material if it would be likely to induce a reasonable person to
manifest his assent, or if the maker knows that it would be likely to induce the recipient to
do so.
iii. RESTATEMENT 164 WHEN A MISREPRESENTAION MAKES A CONTRACT VOIDABLE
1. If a partys manifestation of assent is induced by either a fraudulent or a material
misrepresentation by the other party upon which the recipient is justified in relying, the
contract is voidable by the recipient.
2. If a partys manifestation of assent is induced by either a fraudulent or a material
representation by one who is not a party to the transaction upon which the recipient is
justified in relying, the contract is voidable by the recipient, unless the other party to the
transaction in good faith and without reason to know of the misrepresentation either gives
value or relies materially on the transaction.
iv. RESTATEMENT 167 WHEN A MISREPRESENTATION IS AN INDUCING CAUSE
1. A misrepresentation induces a partys manifestation of assent if it substantially contributes
to his decision to manifest his assent.
v. Halpert v. Rosenthal-
1. (D refused to go through with an agreement for the purchase of Ps termite infested
house.)
2. RULE: When one induces another to enter into a contract by means of a material
misrepresentation, the induced person may rescind the contract. It does not matter if the
misrepresentation was innocent or fraudulent. A misrepresentation, even if innocently
made, may be actionable if made and relied on as a positive statement of fact.
vi. Byers v. Federal Land Co.-
1. (Byers entered into a written contract to purchase land in Wyoming sight unseen from Fed
land Co.)
2. RULE: An honest opinion as to the monetary value of property, stated as opinion, is not a
fraudulent misrepresentation.
B. Duress
i. 175 WHEN DURESS BY THREAT MAKES A CONTRACT VOIDABLE
1. If a partys manifestation of assent is induced by an improper threat by the other party that
leaves the victim no reasonable alternative the contract is voidable by the victim.
2. If a partys manifestation of assent is induced by one who is not a party to the transaction,
the contract is voidable by the victim unless the other party to the transaction in good faith
and without reason to know of the duress either gives value or relies materially on the
transaction
ii. RESTATEMENT 176 WHEN A THREAT IS IMPROPER
1. The threat is improper if
a. what is threatened is a crime or a tort, or the threat itself would be a crime or a tort if
it resulted in gaining property,
b. what is threatened is a criminal prosecution
c. what is threatened is the use of a civil process and the threat is made in bad faith, or
d. the threat is a breach of the duty of good faith and fair dealing under a contract with
the recipient
2. A threat is improper if the resulting exchange is not on fair terms, and
a. would not significantly benefit the party making the threat,
b. the effectiveness of the threat in inducing the manifestation of assent is significantly
increased by prior unfair dealing by the party making the threat, or
c. what is threatened is otherwise a use of power for illegitimate ends
iii. Austin Instrument v. Loral Corp-
1. (Austin threatened to withhold delivery of parts from a first contract if Loral Corp did not
meet their demands in negotiating a second contract. A contract is voidable on the ground
of duress when a party making the claim was forced to agree against their freewill.
2. The existence of economic duress is demonstrated by proof that immediate possession of
needful goods is threatened.
3. Requirements:
a. a threat by one party to breach the contract by not delivering the required items
b. The threatened party must not be able to obtain the goods from another source,
c. the ordinary activity of an action for breach of contract was not adequate.
iv. United States v. Progressive Enterprises-
1. (action brought to recover the unpaid balance due for the purchase of cast iron deaerator
supplied by the P (Crane Comp) to the D to be installed as part of the Ds contract with the
U.S.)
2. RULE: The effective use of bad faith to escape performance on the original contract terms is
barred, and the extortion of a modification without legitimate commercial reason is
ineffective as a violation of the duty of good faith. UCC 2-209 provides that an agreement
modifying a contract for the sale of goods does not require additional consideration in
order to be enforceable as long as it is executed in good faith
v. Distinguishing these two cases: Austin= duress, Progressive not duress
1. Similarities: Not much choice in suppliers, Govt contracts, under a schedule
2. Differences: Progressive didnt state they had a problem with the price increase and
submitted its bid to the govt before it got the bid from Crane, No relieance.
C. Undue Influence
i. 177 WHEN UNDUE INFLUENCE MAKES A CONTRACT VOIDABLE
1. Undue influence is unfair persuasion of a party who is under the domination of the person
exercising the persuasion or by virtue of the relation between them is justified in assuming
that the person will not act in a manner inconsistent with his welfare.
a. If a partys manifestation of assent is induced by undue influence by the other party,
the contract is voidable by the victim.
b. If a partys manifestation of assent is induced by one who is not a party to the
transaction, the be without reason to know of the undue influence either gives value
or relies materially on the transaction
ii. Odorizzi v. Bloomfield School District-
1. P sought to rescind his resignation from his teaching job on the basis that it was only given
as a result of duress, undue influence, fraud and mistake.) Court said no fraud, duress, or
mistake but found there was undue influence.
2. RULE: Undue influence is exerted when the injured partys independent will is
overpowered by that of a superior party, or his agents, at a time at which the victim was
particularly vulnerable
iii. ELEMENTS:
1. Undue influence involves the use of excessive pressure to persuade one vulnerable to such
pressure, pressure by a dominate subject to a servient object.
a. Lessened Capacity
2. It is possible that exhaustion and emotional turmoil may wholly incapacitate a person from
exercising his judgment.
3. Excessive strength
a. Unusual or inappropriate time
b. Unusual place
c. Insistent demand to finish at once
d. Emphasis on consequences
e. Multiple persuaders
f. Absence of advisors
g. Statements that is no time to consult financial advisors or attorneys
D. Unconscionability
i. UCC 2-302 UNCONSCIONABLE CONTRACT OR CLAUSE
1. If the court as a matter of law finds the contract or any clause of the contract to have been
unconscionable at the time it was made the court may refuse to enforce the contract, or it
may enforce the remainder of the contract without the unconscionable clause, or it may so
limit the application of any unconscionable clause as to avoid any unconscionable result.
2. When it is claimed or appears to the court that the contract or any clause thereof may be
unconscionable the parties shall be afforded a reasonable opportunity to present evidence
as to its commercial setting, purpose and effect to aid the court in making the
determination.
ii. RESTATEMENT 208 UNCONSCIONABLE CONTRACT OR TERM
1. If a contract or term thereof is unconscionable at the time the contract is made the court
may refuse to enforce the contract, or may enforce the remainder of the contract without
the unconscionable term, or it may so limit the application of any unconscionable term as to
avoid any unconscionable result.
iii. Substantive v. Procedural Unconscionability
1. Sliding Scale- The more substantially oppressive the contract term, the less evidence of
procedural unconscionability is required to come to the conclusion that the term is
unenforceable and vice versa
2. Procedural
a. surprise- the extent to which the supposedly agreed upon terms of the bargain are
hidden in the prolix printed form drafted by the party seeking to enforce the
disputed terms
b. disproportionate bargaining power
c. contract of adhesion
3. Substantive
a. the substantive element of unconscionability analysis focuses on overly harsh or one
sided results
iv. Meaningful Choice
1. Whether a meaningful choice is present in a particular case can only be determined by
consideration of all the circumstance surrounding the transaction.
v. Reasonability
1. The terms are to be considered in the light of the general commercial background and
commercial needs of the particular trade or case.
2. Where the terms are so extreme as to appear unconscionable according to the mores and
business practices of the time and place.
vi. Williams v. Walker Thomas Furniture Co.-
1. (Woman purchase a number of items from Walker over a period of time by paying in
installment, the contract stated that the payments would be put to her balance on a pro rata
basis, She defaulted and they sought to replevin all the items.)
2. RULE: Where elements of unconscionability are present at the time a contract is made, the
contract should not be enforced.
vii. DEFINITION: Unconscionability has generally been recognized to include an absence of
meaningful choice on the part of one of the parties together with contract terms which are
unreasonably favorable to the other party.
1. Gatton v. T-Mobile-
a. (P entered into service agreement with D that included an arbitration agreement and
a no class action agreement. The agreements called for a $200 early termination fee
and the cell phone was blocked from being used by another cell provider.) Is a
consumer contract of adhesion that contains an arbitration clause and a class action
waiver unconscionable where the customers have the choice of alternative
providers?
b. RULE: The adhesive nature of the service agreement established a minimal degree of
procedural unconscionability notwithstanding the availability of market alternatives
and that the high degree of substantive unconscionability arising from the class
action waiver rendered the arbitration provisions unenforceable.