Approach

Exam problem
1. What is the applicable law?
a. Choice of law - UCC or R.2d
2. Offer? Is it Irrevocable?
3. Acceptance
a. Deviant
i. Mirror image
ii. BOF
b. Problem with formation? Then,
i. Maybe Restitution or Reliance
4. Validation
a. Consideration
b. Reliance
c. (Seals and Moral Obligation)
5. Formation Defects
a. Insufficiency
b. Statue of Frauds
c. Mistake
d. Misrepresentation
i. Fraud
ii. Matirial Mis Rep
e. Duress and Undue Influence
f. Unconscionable R.2d 208 (k or term) & UCC 2-302 (K or clause)
i. Adhesion
g. Illegal or Public Policy
h. Capacity
6. Damages remedies
a. $ Equitable Relief
i. Restitution
ii. Reliance
iii. Expectation
b. Limitation on Equitable Relief
i. Foreseeable
ii. Unavoidable
iii. Certain
iv. Compensatory
I.
Remedy
a. Three Interest
i. Expectation Places P in the place hed be if K was performed.
1. Substantial Performance
ii. Restitution Return of benefit conferred on the other.
iii. Reliance Returns P to place hed be before K.
iv. Specific Performance Not if $ is sufficient. Usually only Land.
b. 5 Limitations
i. Foreseeable to Offeror (acts of god not)
ii. Unavoidable P could not avoid the damage after Ds breach
iii. Caused by Breach
iv. Certain Ct must have rble basis to determine how much to award.
v. Compensatory
II.
Offers & Acceptance
A. Objective Theory of Assent - R.2d 2(b), 18
a. Manifestation of Assent (both parties must), Promise or begin
Performance.
b. Capacity - 12 Legal capacity to incur at least voidable K duties.
i. May be partial

B.

ii. Under Guardianship

iii. Infant
iv. Mentally Ill
v. Intoxicated but not Lucy v Zehmer intoxication.
c. Objective Test - of Manifestation of Intent to be Legally Bound. (Por has
reason to know Pee will infer such intention)
i. Limitation
1. Gentleman Agreement (dinner plans), Family Promises etc
2. Informational Publications
a. Price Quotes must contain promissory language
to = MI to be Legally Bound
b. Ads Id.
Offers - 24
1. Definition - Manifestation of Intent to be Legally Bound, Must Be:
i. Promissory
ii. Definite
iii. Complete - 33 Terms must be certain so as to provide a basis
to determine existence of a breach and an appropriate remedy.
1. More Closed Terms: higher chance of binding K.
2. UCC 2-305 Open Price Term
a. Both Parties Intend a K but price is not settled
= rble price at time of delivery:
i. Fail to agree.
ii. 3rd Party to set price.
iii. Fair Market Value.
b. Seller or Buyer to Fix Price = Fixed in Good
Faith.
c. Fixed Other than by Agreement and by fault
of one party is not fixed = the other party may
Cancel K or himself set rble price.
3. UCC - 2-204(3) court may fill in terms for price, place of
delivery, time for shipment, as long as the parties intended
to make a K
a. Quantity is necessary, but even that can be
incorrect
SO THAT
iv. RP Justified in his belief that his assent will form K.
2. Power of Acceptance - 35
3. Master of Offer - 30
a. Offeror = Master and may:
i. Specify Mode and Term of Acceptance.
ii. Change Terms anytime before acceptance.
b. Unspecified Mode Acceptance by mode of Offer, equivalent or better.
4. Duration Termination of POA
i.
Lapse - in time 41
a. Specified by the Offer. OR (if not specified in offer)
b. Reasonable Time for the circumstances, ex. 30
i. Unless otherwise indicated by language or circumstance:
offer by mail acceptance by mail by mid-night of day
offer received = seasonable.
ii.
Death - 48
a. Either party dies or deprived of legal capacity to enter into the
proposed K.
iii.
Revocation - 42, 43 & 46. (Respectively) only effective upon receipt.

a.

Direct Offeree receives from Offeror Manifest. Int. not to enter

into proposed K.
b. Indirect Offeree receives reliable information that Offeror took
definite action inconsistent w/a MI to enter into the proposed K.
c. General Os Offer by general notification, or to persons
unidentified to Offeror, Termination by public notification, where
no other mode rble, is valid.
iv.
Rejection - 38, 39, & 40. (Respectively)
a. Offeree manifestation of intention not to accept an offer.
i. Except:
1. Offeror manifest contrary intention, ie
blahblah...even if u rejectoffer open
2. Rejecting offeree also manifest intent to take
further thought re offer.
b. Rejection by Mail only limits the POA of an acceptance mailed
subsequently, to a counter-offer unless offeree received it before
rejection.
C. Irrevocable Offers - 87. 3 Types then UCC:
a. Option K. NO MAILBOX RULE
i. Writing/Signed O must be in writing and signed by Offeror, mini k
about terms of Acceptance of a larger K.
ii. Consideration 25 must be given for keeping the Offer Open.
iii. Fair Terms w/i Rble Time re details of proposed Exchange.
b. Irrevocable - by Statute. OR
c. Reliance - Oor should rbly expect to induce substantial action/forbearance
by offeree before he accepts, and does so.
i. Enforced as Option K to extent necessary to avoid injustice.
d. Firm Offers UCC 2-205 NO MAILBOX RULE
i. Signed assurance must be signed separately by Oor.
ii. Consideration not needed.
iii. 3 Month Max if assurance w/o time given.
1. Consideration 71
a. Bargained for Exchange ie performance or return promise must be
sought by the promisor in exchange for his promise.
i. Performance legal detriment promise or benefit to promisor.
b. Performance/return promise may be given to promisor or another, by
promisee or another.
2. Reliance - 90 Promissory Estoppel
a. Promisor should rbly expect his promise to induce action/forbearance
by pee or another, and does induce such = if injustice is avoided only
by enforcing his promise it is binding.
3. Beginning Performance of Unilateral Contract - 45
a. Option K - created by offeree when he begins performance of an offer
that invites acceptance by performance only.
D. Acceptance - 50: Manifestation of Assent to terms of an offer by acceptable Mode.
a. 60 Suggestion - of time, place or mode for acceptance does not preclude
another method.
b. NON-Conforming Goods Acceptance unless rble notification its an
Accommodation.
c. 63 Mail-Box-Rule
i. Acceptance by rble mode invited for is operative to complete the
manifestation of mutual assent the moment the acceptance is put
out of the Oee possession.

E.

ii. Condition - 66 dispatch of acceptance by mail or from a distance

must be proper and ordinary precautions for safe transmission
taken. ie addressed correctly, etc.
1. Exception - 87 Option Ks M-B-R
d. Performance in part & allowed by offer = return promise.
i. Notification unnecessary, unless otherwise specified
1. Exception: 54 Oor no way to know of perf. w/i rble time
his obligation is discharged.
a. Exception to Exception:
i. Oee due dil to notify.
ii. Oor finds out.
iii. Offer specify notification not needed.
ii. 51: Acceptance by completion of performance, unless otherwise
is valid. ie. Knowledge of offer after part perfmnce.
iii. Exception: 53(2) Rble notification of non-acceptance negates by
part-performance-as-acceptance.
1. Exception to Exception: 69 silence as acceptance when
applicable.
e. Promise - 56
i. Due diligence to notify. OR
ii. Seasonable knowledge of the acceptance.
f. Silence operates as acceptance ONLY in the following cases:
i. Benefit - Oee takes benefit of the offer, has rble opportunity to
reject, & that there was expectation of compensation.
ii. MOO & Intended MOA by silence
iii. Prior Dealings notification of rejection is rbly expected.
Deviant Acceptance
1. CL Last Shot 59
a. Acceptance conditioned on assent to additional requirements =
rejecting counter offer. Mirror-Image
i. But: Acceptance proposing additional terms = NON-rejecting
Counter Offer.
ii. Result last offer/counter offer before performance is read as
terms of the binding K.
2. UCC Battle of the Forums
a. 2-104(1) Merchant A person who deals in goods of the kind or
otherwise by his occupation has knowledge of whats going on so as to be
considered knowledgeable.
b. 2-104(3) Between Merchants Means in any transaction with respect
to which both parties are chargeable with the knowledge or skill of
merchants.
c. Track A: Acceptance which states additional or different Terms than
Offer: (Addl Different)
i. Non-Merchants Addl Terms = proposals for addition to K.
1. Must be Expressly agreed to.
2. Conduct actual/express acceptance.
a. Except if clearly expresses acceptance. ex.
Acting on the new term.
3. Determine who is Oor:
a. Klocek Consumer is Offeror. 7th Cir. V as
MOO not supported.
b. Easterbrook, J Vendor is MOO Bad Rule.
Rolling K below.
ii. Both Parties Merchants = Addl terms become a part of the K.
Unless:

1.
2.
3.

III.

Offer limits acceptance to its terms. Or,

Terms Materially alter K: Ex. Hrdshp/Srpris. Or,
Notification of objection to them given w/i a rble
period of time.
iii. Different Terms (UCC 2-207(2) only mentions Addl terms)
SO: 3 ways to deal with Different Terms
1. Knockout (Majority) Diff. Terms of offer and
acceptance dropped and replaced with default fillers.
2. Fallout (Minority) Offeror terms read in. Oees drop
out.
3. Mistake (Cal.)Different included in sub(2). Run
them through 2-207 as Addl.
d. Track B: Acceptance CONDITIONAL on assent to additional or different
terms:
i. Rejecting-Counter Offer requires express assent.
ii. Conduct (w/o express assent) = K with
1. Agreed Terms. +
2. UCC default fillers. Ex Trade Usage, Course of
(Prior)Dealings, Course of Performance.
3. Battle Summation:
a. Proviso A:
i. Non-Merchant: K = Offer Ts Difft Ts + Default Ts.
1. Exception: If proposed terms by acceptance is
expressly agreed to by Oor.
ii. Merchants: K= Offer Ts + Addl Ts Difft Ts + Default Ts.
1. Exception: Seasonable Objection, Matirial Alr, MOO =
No K + UCC 2-207(3)
b. Proviso B:
i. Conduct: K = Agreed Ts + Default Ts/gap fillers.
4. Rolling Ks Easterbrook, J: Pay now, Terms later.
a. Vendor = Offeror
b. Buyer that keeps item = Acceptance of addl terms.
c. Unless buyer did not have time or notice to read terms.
Validation
A. Consideration/Substitutes
1. Definition - 71
a. Bargained for Exchange ie performance or return promise must be
sought by the promisor in exchange for his promise.
i. Performance legal detriment promise or benefit to promisor.
b. Performance/return promise may be given to promisor or another, by
promisee or another.
c. Motive - 81 Unless both parties know the consideration is merely
pretense, motive (re bargained for )is irrelevant.
2. Adequacy - 79 If Exchange is Bargained For the following is irrelevant:
a. Gain, or benefit to promisor
b. Loss or detriment to the promise
c. Equivalency of the values exchanged
d. Mutuality of obligation
3. Past Consideration - 86 Promise in recognition of a previously received benefit
is binding to the extent Justice is served. UNLESS:
a. Previous Benefit Unjust enrichment. ie Gift.
b. Value is disproportionate to PB enforceable to eq value.
4. Pre-Existing Duty - 73 Performance of a certain legal duty to the por
consideration. UNLESS:
a. The performance differs from the P-E D more than a mere pretense.

5.

IV.

Illusory Promise - 77 Promise that reserves the por right of alternative

performance consideration. UNLESS
a. Each stipulated alt performance wld be sufficient consideration on its
own. OR
b. One of the alt perf = consideration, and there exists a substantial
possibility that the other alt perf will be eliminated before the por
makes his choice.
B. Reliance Outline C(3): Promissory Estoppel
C. Moral Obligation - 82 Promise to repay a debt unenforceable by statue of
limitations is binding. Facts that may operate as Promise of the same:
a. Statement that SOL will not be pleaded.
b. Transfer of equity.
c. Admission of present existence of the debt.
D. Seals 95 Seal your face. Ps in writing bind regardless of consideration, if it meets
the cond., usually state statues cover this.
Formation Defects
a. Indefiniteness Ambiguity in contract from the meaning of the language (which
Peerless?) or missing terms.
i. UCC Fillers for most terms. Parties must intent to K and Ct will use fillers.
ii. R.2d Usually try to Fill Ts if Parties intended K. 20 Misunderstanding
1. Materially Different Meanings
2. No Reason to Know of the Others Meaning
3. Or Party has Reason to Know the Others Meaning (~correction tho)
a. Exception Manifestations Operative w the meaning of
Party A IF:
i. A does not know the others attached meaning. &
ii. The other knows As attached meaning.
iii. A no reason to know Other, Other reason to know A.
iii. Agreement to Agree in the Future: Maybe Negotiate in Good Faith Duty.
iv. Not Enforceable No Intent of Party to form K or no Gap Fillers.
b. SOF - 131, 132, & 139
i. Ks subject to SOF MYLEGS (marriage, year, land, executor, goods,
suretyships)
1. Marriage - .is the consideration, courts dont want to be involved.
2. Year Ks that cannot be completed w/i 1 year.
a. Given all possible resources.
b. Time ticks moment K is operative.
c. Option to cancel an SOF service K complete w/i 1 year.
i. But option to terminate may = complete w/i 1
year in some circumstances.
ii. Exception K intentionally provides for
termination upon death of either party.
3. Land any exchange of interest, eg mortg
a. Except short-term lease (under 1 year).
4. Executory promises to answer personally for the estate they are
overseeing.
5. Goods $500
a. Purpose of k must be a sale for UCC to apply. If its purpose
is a service, eg interior designer installing oven UCC.
6. Suretyships anyone that promises to pay a debt of another. @ ppl
on the hook at the same time. Guarntor 1 p on the hook.
a. Exception: Surety is for personal benefit.
ii. Satisfying SOF -

1.

2.

c.

3.

Writing - 131 K must be evidenced in writings and signed by the

charged party.
a. Signature acceptable as long as intended to show
approval of the writing. Ex. Logos, scratches etc
b. Witnesses can evidence writing.
c. Rbly identify the subject matter
d. Indicate a K, or an offer by charged party, has been made.
e. Essential terms of the unperformed promise, with rble
certainty.
f. 132 May consist of several writing.
i. At lease one is signed by the charged.
ii. All clearly relate to the same transaction.
1. Some Jx req. doc w signature refers to the
other writings.
Performance - 139 (keep in mind the rbleness of the action and
fbleness of action due to promise.)
a. Full by either party = no SOF
i. Condition: performance directly traced to K.
b. Part
i. Land recovery = reliance. 3 Factors, 2/3 =
exempt from SOF.
1. Payment in part
2. Improvement to land
3. Possession
ii. Goods enforceable w/o SOF to extent of
performance.
iii. Service recovery = unjust enrichment. Ex.
Render 1 mo. service of 2-year k, recover that
1mo.
Judicial Admission UCC 2-201(3)(b), CL not accepted.

4. Reliance - 139 Promissory Estoppel & UCC 2-201.

iii. Other Issues
1. > 1 category ex. K to buy widgets for 2 years.
a. Determine the purpose of the K
i. Goods = UCC (ex Best Buy deliver Fridge)
ii. Service = R.2d (ex Intr Designer delivers Fridge
from Best Buy)
2. Modification Modification to K which:
a. Exempt K from SOF writing. Ex K = $500 for car,
modified to $400.
b. Subject K to SOF = must be in writing. Ex opp of above.
3. Authorization of employee to enter into K that is
a. Subject to SOF = must be in writing.
b. ~Subject to SOF writing.
Mistake Basic Assumption, which has a material effect of the exchange, and
avoiding party does not bear the risk. Ex. quantity.
i. Mutual - 152 Both parties mistaken: Factors to check if avoiding party
bears the mistake: (Its ok if (Avoiding Party) was negligent here)
1. K -
2. Circumstances if avoiding party was N
3. Custom ex. Value mistake voidable.(barren cow case)
ii. Unilateral 154 One party made mistake: Factors:
1. Other party caused, knew, or shouldve known of the mistake.
Snap-Up

d.

e.

2. Enforcements Unconscionable P Grossly Negligent. N OK.

iii. Remedies providing at-fault party acted in good faith & w rbly fair
dealings
1. Reformation 155 of K ok to extent that 3rd party not unfairly
affected.
2. Void/Rescind K where 152-5 allows, avoidance may be
granted.
a. Restitution - 376 A party that avoids a K due to lack of
capacity, duress, mistake, undue influence or breach of
fiduciary duty, is entitled to restitution for any benefit
conferred by part performance or reliance.
Fraud/Misrepresentation = Assertion that concealed fact does not exist, WHEN it
is known or likely to induce other party to Manifest his Assent. {KLIMA}
i. Action that conceals a fact which is known or likely to Induce other party
to M his A = Assertion fact does not exist.
ii. Non-Disclosure of known fact which is KLIMA = assertion fact does not
exist, WHEN the non-disclosure would correct
1. Previous misrepresentation (that was assertion.)
2. Known mistake by other party of basic assumption & the ND would
good faith and fair dealings.
3. Mistake re Content of Material evidencing the agreement. Ex the
writings.
4. Relationship of trust and confidence bet parties entitles other
party to the information.
iii. Opinion - 168 Defined: Assertion is a:
a. Belief w/o certainty. OR,
b. Judgments of value or authenticity.
2. Where rble an assertion by opinion = assertion is:
a. Compatible w facts known to maker.
b. Sufficient Knowledge of facts to justify his opinion.
3. Reliance on Opinion - (169) ~ Justified. UNLESS,
a. Justified Reliance when:
i. Relationship - of trust and confidence.
ii. Rble Belief - that maker has special skill, or has
objectivity over the subject matter.
iii. Special Reason - party is susceptible to the TYPE of
misrep. involved.
iv. Fraud 162(1)Assertions Reckless or worse (Scientor).
1. Maker knows or believes his assertion is not true.
2. Does not have the basis implied for making his assertion.
v. Material 162(2) Assertion maker knows is Likely to I a RP or the other
party to MA.
vi. Remedy - 164 Where MOA is induced by 162(1) or (2) by other party or
3rd party as maker, & he is justified in his reliance = K is VOIDABLE.
1. Exception 3rd party is maker and the other party to the K
materially relies on K, & acted in GOOD FAITH, & w/o reason to
know of the misrepresentation.
Fraud Summery: Elements of Fraud:
i. Affirmative Misrepresentation of Material Fact or Actionable Omission-Duty
ii. Either Material or Scienter (reckless or worse) (Puffery Affirmative Misrep)
iii. Justifiable Reliance by P
iv. Damage to P
1. Diff Jx = Diff Duty to Disclose (NY Latent not Patent Defects)
a. Latent Defect could not be discovered by a rbly thorough
inspection. Patent would be discoverable by the same.

f.

Abridged List
V.
VI.
VII.
[compared to]
VIII.
IX.
X.
XI.

Duress/ Undue Influence Party does not intend his MOA but acts due to:
i. Duress by
1. Physical Threat (174) = NOT a MOA (k is void)
2. Improper Threat [175(1)] Threat is wrongful and Vs freewill
overcome. Voidable, UNLESS:
a. Exception 175(2) - 3rd party maker and other party to K
in good faith and without reason to know of duress
materially relies on K.
3. 176(1) Improper if threat is:
a. Crime or Tort.
b. Criminal Prosecution.
c. Use of Civil Process in bad faith.
d. Breach of Good Faith & Fair Dealings re K. OR,
e. 176(2) Resulting Exchange Terms are Unfair & Threat is
i. Harmful to recipient but not maker.
ii. Magnified by makers prior unfair dealings.
iii. Use of Power for Illegal ends.
ii. Undue Influence 171
1. Unfair use of persuasion. OR,
2. Party is justified in assuming maker will act consistent with his
welfare.
3. Remedy K is voidable.
a. Exception U/I is by 3rd party and other party to K in good
faith and without reason to know of U/I materially relies
on K.
g. Unconscionable K is so one sided or bargain power so uneven it Shocks the
Conscience. No honest person would act this way. TEST for Uncon. is both:
i. Substance - Merits of provision one sided. Ex $3k for a $200 item.
ii. Procedural Unequal Bargaining Power, Ks of Adhesion, Duress, etc.
iii. Adhesion Ks Unconcble if it ignores the issue of informed consumer
consent.
1. Duty to Read
a. If medium not usually K must bring others attention to it.
2. Blanket assent to reasonable terms.
h. Illegality/Public Policy Bargain is for crime or tort. VIOD. Factors to determine if
K is illegal/unenforceable:
i. Freedom to Contract
ii. Justified Expectation
iii. Forfeiture
iv. Public Policy If pp of illegality > pp to enforce = unenforceable
v. Restitution available if parties are not equally wrong. Ex:
i. Ignorant party.
ii. Withdrawal Upon Awareness of Wrongfulness.
Justified expectations
Forfeiture
Public interest in enforcing
Public interest in rejecting
Rejecting furthers the policy
Seriousness
Directness of relationship between misconduct and the term

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