Contracts Outline

SOURCES OF CONTRACT LAW

A. Article II Uniform Commercial Code (U.C.C.)
1. 103(k) (2-207)Governs the sale of goods
a. things are MOVABLE(seller severs the goods) at the time of ID in the k
b. other things are buyer/seller sever without material harm
2. 2-204 (LIBERAL) Conduct/Intent is assessed beyond some essential terms
3. Applies REGARDLESS of amount unless dictated by other statutes.
B. Common Law
1. Supplements where U.C.C. does not apply or define terms (offer, consideration, etc.)
2. Contract MUST include ALL ESSENTIAL TERMS.
3. Transfer of Title transactions like leases, bailments, services, and securities, etc. (nongoods)
C. Statute of Frauds 2-201 (within the U.C.C.)
1. ONLY applies to the sale of goods
2. Requires writing/signature by the parties
D. Contract Theory:
Classical/Formalism (Williston)

Modern/Realism (Corbin)

Clear rules (legal formalism); straightforward with minimal

exceptions;

general standards

Indifferent to morality, political or social policy

social justice and economic power (e.g. "good faith",

"unconscionability")

I.

BILATERAL CONTRACTS : OFFER & ACCEPTANCE

At what point do the parties have an enforceable contract?

A. Bilateral Contracta promise for a promise, exchange on both sides FUTURE act(s)
B. Four (4) Elements of a Contract:
1. OFFER
a. a manifestation of an intent to be bound and create the power to accept
EXAMPLE: I will sell you my car for $5,000.- clear and definite, offeree can accept
right away- no discussion needed
WRONG EXAMPLE: The lowest price I will accept for my car is $5,000.- not clear,
offeree cant accept right away b/c the price would still need to be decided upon
b. the OFFEROR is the MASTER of the offer
c. Offer can be:
i.
Accepted/Rejected when Offeree notifies acceptance/rejection
ii.
Revoked by Offeror before acceptance by the Offeree
d. by oral/written/conduct
2. ACCEPTANCE
a. The offerees role to accept or reject
b. Mirror Image Rulethe acceptance must mirror the offer
EXAMPLE: Common offers to sell Beyonce his book for $25. Beyonce agrees to buy
his book for $25.
WRONG EXAMPLE: Common offers to sell Beyonce his book for $25. Beyonce agrees
to buy for $20.

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3. MUTUAL ASSENT

SUBJECTIVE
OBJECTIVE
Meeting of the Minds
Mutual Assent
Considers both parties intent/belief
Considers a reasonable persons intent
4. CONSIDERATION
a. Something given up in exchange for something else
b. something of value bargained for and given up by both parties
c. a promise is unenforceable without it
C. Case ExampleRay v. William G. Eurice & Bros., Inc. p. 33 (MD, 1952). The court held that
the builders breached the contract, lacked mutual assent and interpretation of the terms of the
contract.
D. Hypo: Common offered to sell his book to Drake for $50 and Drake paid $50 for the book.
E. EXCEPTIONS/COMMENTS:
1. ADVERTISEMENTS
a. Generally NOT contracts/offers BUT CAN BE with:
i.
Words of limitation
ii.
Bait & Switchbaited in at a lower price, then switched to a costlier item
2. JOKEScan be offers if a reasonable person considers the terms serious
3. FACE-TO-FACE OFFERterminates at the close of the conversation
4. COUNTER-OFFERrejects the existing offer and creates a NEW manifestation & power to
accept!
5. OPTION K
a. Protects the offeree
b. Two (2) Necessary Terms:
i.
Promise to keep the offer open for a reasonable amount of time
(deadline/expiration)
ii.
Valuable consideration
II.
UNILATERAL CONTRACTS : OFFER & ACCEPTANCE
A. Unilateral Contracta promise for specific performance
B. REWARD OFFERSname a price but do not specify offeree/can be multiple offerees (performers)
EXAMPLE: I will pay $100 to the person who finds my lost dog.
EXAMPLE: Carbolic Smokeball casepromised to pay $100 to anyone who tried the ball but still got
the flu.
C. Three (3) Theories of Performance: 3rd Theory = SUBSTANTIAL PERFORMANCE (subjective)
CLASSICAL/TRADITIONAL
R2C 32 / COMMON LAW
Promisor CAN revoke at ANY time until COMPLETE
performance notwithstanding mere preparation

III.

MODERN
R2C 45
Promisor CANNOT revoke for a reasonable time
upon (begin/tender) toward COMPLETE performance
not withstanding mere preparation

THE MAILBOX RULE(MBR)

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ONLY APPLIES TO CONVENTIONAL ACCEPTANCE
A. Its a common law rule
B. When its effective? upon DISPATCH of acceptance. Revocation/Rejection upon RECEIPT.
C. Why its important? protects the Offeree by creating a BINDING contract upon dispatch of
acceptance
D. Four (4) EXCEPTIONS (MBR DOES NOT APPLY):
1. If Offeror specifies other mediums to accept (fax, email, phone, certified letter, hand
delivery)
2. If Offeror receives acceptance of an option k (promise to keep open + valuable
consideration)
3. If Offerees earlier rejection arrives before later acceptance, then whichever the
Offeror gets 1st applies
4. If Offeror receives a rejection before acceptance AND DOES detrimentally relies on the
rejection = contract
IV.
DEFINING CONSIDERATION
A. The general rule is that a contract is unenforceable without consideration(something of value)
a. Courts cant argue irrational/emotional circumstances
b. 99% of the time it wont be an issue on the exam
B. Two (2) Theories of Consideration:
Benefit-Detriment Theory(MINORITY)
A benefit to the promisor OR detriment to the
promisee
NEED legal RIGHT GIVEN UP

Bargained-for-Exchange(MAJORITY)
The promise must induce the detriment and the
detriment must induce the promise
Quid pro quo; reciprocal inducement

C. EXCEPIONS/COMMENTS:
1. CANNOT be Past/Moral consideration; new consideration
2. CANNOT be mere recital: Just because a contract says it has consideration, doesnt mean it
does.
3. CANNOT be conditional
EXAMPLE: I will give you $100, if you walk to my car.
EXAMPLE: In order to get Kaynes Christmas gift, Common had to drive to his house to get it.
4. CANNOT be pre-existing/legal duty
EXAMPLE: I will pay you $100, if you promise not to kill me.
Police officer tries to get $1,000 reward for finding kidnapped child.
5. CANNOT be part payment of a debt
6. CANNOT be under an existing obligation/contract, EXCEPT for one owed to a 3 rd party (the
Offeror is not getting a benefit from you serving someone else.)
EXAMPLE: I promise to pay you $50, if you cut my grass.
I promise to cut your grass, if you pay me $150.
The lawn man already has an obligation to cut grass, no new
benefit/detriment.
D. INADEQUACY OF CONSIDERATION
a. Doesnt have to be adequate, just sufficient
b. Courts DO NOT police/question what the actual bargain is
c. ASK, Is it scandalous?
E. ILLUSORY PROMISES
a. a promise to perform that leaves the performance up in the air/optional
b. IS THE PARTY COMMITTING TO DO ANYTHING?; neither party really promises anything Ex:
At-Will Employee
c. Gratuitous: normally made at high emotional times
d. lack of consideration
e. EXCEPTIONS/COMMENTS:

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1. Secondary Commitments-other contracts/preparations derived from the illusory
promise(may be detrimental reliance)
2. Unilateral Contract-courts will enforce due to performance being performed
EXAMPLE: I promise to buy your car sometime in the future.
EXAMPLE: I promise to do something but I reserve the right not to do it.
f. Marshall Durbin Theorywhen the offeree unreasonably relies on the illusory promise, there
may be no recovery
g. Marshall Durbin v. Baker p. 134 (MI, 2005). Employment at-willcontracts under this
illusory premise can still be enforced with the unilateral contract doctrine.
F. Case Example: Dougherty v. Salt p. 113 (NY, 1919). Aunts estate didnt have to pay on
promissory note with value received written on it because there was no benefit-detriment of
consideration on her end. Mere recital of consideration no actual value received to her.
G. Hypo: Common promised to give Beyonce $30,000 on her 30 th birthday if she agreed to stop getting
paid to do live concerts until then.
IV. OPEN PRICE TERM COMMON LAW V. U.C.C.
A. The courts will not supplement essential terms in common law
B. The most important term not to be left open is QUANITY
C. Some courts will step in upon a LEASE RENEWAL AGREEMENT under the U.C.C.:
1. To protect the lessee
2. To prevent the landlord/lessor from taking advantage of the tenantforcing them to leave if
they know the price is not set in stone or if there is not a set way to compute the term
3. The method to determine the price term must have specificity and indefiniteness
D. U.C.C. 2-305 OPEN PRICE TERM
a. (1)The price can be left open, the court will step in a determine a reasonable price
b. (2)Either buyer/seller can determine the price in good faith/fairly
c. (3)If the parties agree to that one person will set a price and they act unfairly, the other can
cancel or fix a reasonable price
d. (4)If the parties dont agree to agree/intent to be bound, there is no contract. The courts will
review case-by-case
VI. FIRM OFFER UNDER THE U.C.C
2-205:
MUST satisfy these conditions:
An offer to buy/sell goods
Made by a merchant anybody in business/ specialized knowledge of general biz practice
Contained in signed writing (can be drafted by the buyer and sent to the seller
for signing)
Signature, initials, seal/stamp, letterhead
4. That gives ASSURANCE that the offer will remain open
b. If these conditions are met, the offer will be IRREVOCABLE either for the amount of time
specified but no longer than 3 months UNLESS consideration is given by 3 rd month (not
favored against common law option k), AND
c. The Seller is operating in his merchantable capacity
d. Merchant is someone skilled in the goods of any kind. Firm offer does not have to be in the
merchants business
e. There has to be a merchant involved, time restriction, and it has to be contained in a signed
writing=difference between Option K
f. Firm offer for merchants, more official; Option K for everyone else
U.C.C. 2-104: MERCHANT
a. Two (2) Categories:
1. A person who deals in goods of the kind OR

A. U.C.C
a.
1.
2.
3.

B.

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2. Otherwise by occupation hold himself out to have knowledge/skill in the goods
involved in the transaction
VII. U.C.C. 2-207 BATTLE OF THE FORMS
Applies when the offer has been made and the offeree accepts with additional or different
terms.
Operates under the assumption that merchants dont read the additional/different terms but
they do read essential terms.
A. COMMON LAW
a. follows the mirror image rule (acceptance must mirror the offer) AND/OR
b. follows the last shot rule (whoever sends the last shot form determines the terms and
conditions of the contract
B. TYPICAL FORMS
a. Price Quote- Sent by seller, usually NOT offer but invitation to negotiate
b. Purchase Order- Sent by buyer, will have terms and conditions to protect themselves
(OFFER)
c. Acknowledgment- Sent by seller, will have its own terms and conditions (COUNTEROFFER)
C. 2-207 TWO STEP
1. IS THERE AN OFFER?
2. 2-207 (1) TWO (2) POSSIBILITES OF CONTRACT FORMATION:
i.
Definite and seasonable expression of acceptance, OR acceptance within reasonable
time
ii.
Written confirmation (phone, memo, followed by acknowledgement)
ONLY concerned with the Key/Essential Terms
= ACCEPTANCE w/ additional OR different terms in the OFFER
3. 2-207(2) ADDITIONAL TERMS:
i.
BOTH parties NOT MERCHANTS additional terms are proposals
ii.
BOTH parties ARE MERCHANTS additional terms will be apart of the k UNLESS:
The offeror expressly limits acceptance to the terms in the offer (master of the offer),
L.L. will not get in
L.L. will not let additional terms in if its in the offer
The term(s) materially alter the k (can cause surprise OR undue hardship)
The offeror has expressly rejected within a reasonable amount of time
ANY OF 3 EXPECTIONS WILL CALL FOR DROPOUT OF THE ADDITIONAL TERM
4. DIFFERENT TERMS: THREE (3) APPROACHES:
i.
Treat as additional terms (minority); walk back through 2-207(2)
ii.
KNOCKOUT RULE (MAJORITY): drop additional terms and supplement with code/normal
dealings behavior (still wont supplement quantity)
iii.
DROP OUT RULE: drop additional terms and NOT replace/supplement
5. 2-207(3)/ 2-204 CONTRACT BY CONDUCT:
i.
NO K under 2-207 but the parties STILL PERFORM SUFFICIENTLY = KNOCKOUT RULE for
addtl or diff terms and supplement them with something from standard conduct from
business and then next they will supplement something from the Code
ii.
NO CONDUCT = NO K
6. LIMITING LANGUAGE IN THE OFFER or MAGIC LANGUAGE IN THE ACCEPTANCE:
i.
L.L. in the offer makes the additional terms knocked out
ii.
In the acceptanceConstitutes COUNTEROFFER, NO k
iii.
CANNOT undo a k that has been formed by conduct even upon written confirmation

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iv.

In the offerLanguage will look like this (bold & copious): NO CONTRACT UNLESS
ACCEPTANCE IS MADE EXPRESSLY CONDITIONAL UPON ASSENT TO THE
ADDITIONAL AND/OR DIFFERENT TERMS CONTAINED HEREIN

**recovery of damages/remedy is usually limited to a certain price. Indemnification or excessive recovery

could constitute as materially altering

V.
ELECTRONIC CONTRACTS
A. BROWSEWRAP
a. Seller makes the terms & conditions available
B. SHRINKWRAP
a. After purchasing and receiving the product in shrink-wrap with the terms & conditions, they
have an opportunity to inspect the product and review the contract terms
b. Buyer can return within reasonable amount of time, if they dont, they coincidentally agree
to the terms
c. POINT OF SALE: Benefits Buyer
1. Buyer is the offeror, tenders payment = offer

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2.
3.
4.
5.
d. CASH
1.
2.

Seller accepts payment, ships the good

Buyer receives additional terms in the acceptance of the buyer ( 2-207(2) applies)
Terms wont get in because the transaction is not between merchants
Buyer uses this defense to say seller has accepted and is bound by the offer
NOW, TERMS LATER: Benefits Seller
Seller makes the offer when shipping product to buyer
Buyer accepts the terms & conditions by keeping the product past return period
i.
Can only return if nonconforming/defective
ii.
Seller uses this defense to say that buyer has accepted the terms and is
bound

C. CLICKWRAP
a. User clicks I AGREE before completing transaction
b. ADVANTAGE: Buyer CANNOT deny that they manifested assent; protects the seller
c. DISADVANTAGE: Seller has more difficult time getting the buyer to purchase

VI.

PROMISSORY ESTOPPEL (RESTATEMENT OF K 90)

A promise which the promisor should reasonably expect to induce action or forbearance of a
definite and substantial character on the part of the promisee and which does induce such
action or forbearance is binding if injustice can be avoided only by enforcement of the
promise.
A. If it is reasonable that the promisor should expect the promise to induce action, and the promisee
does induce action, then it is binding if injustice can only be avoided by enforcement.
B. Used to SUBSTITUTE consideration to save an otherwise unenforceable k
C. GRATUITOUS PROMISES WITHIN THE FAMILY
a. Motivated by emotion and feelings
b. Usually lacks consideration because it lacks a detriment to the promisor
c. Usually not enforced by the courts
D. ELEMENTS OF PROMISSORY ESTOPPEL (EQUITABLE DOCTRINE)
a. IS THERE A VALID K? THINK CONSIDERATION or GRATUITOUS PROMISE
If so, the non-breaching party will receive EXPECTATION INTEREST
b. The promisor should reasonably expect to induce reliance (action or forbearance)

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c. The promise is SUBSTANTIALLY & REASONABLY relied on (action or forbearance)
d. Justice would be served by enforcing the promise (justice may limit what the promisee
gets)
e. Modern Trend: courts will not require a heightened standard/ ( clear and
definite promise )
E. EQUITABLE ESTOPPEL
a. Promisor makes misstatement/misrepresentation of fact, NOT promise
b. Promisee relies (action or forbearance)
c. DOESNT mean its intentional
F.
DOCTRINE OF CHARITABLE SUBSCRIPTION/PLEDGE(LOWER STANDARD OF RELIANCE)
a. There needs to be evidence of an enforceable pledge (Donative Intent)
b. Bailment: Establishes an intent to be bound by donating the property to the promisee
c. Presumption favoring the charitable organization - One of the reasons that they agree to
take care of property, there is a presumption that they may get to keep it because it will
take time and money for them to take care of it.
d. Rule: Just have to show reliance. Not necessarily detrimental reliance
e. Policy: Courts want to encourage charitable contributions and the livelihood and well-being
of charities.
f. Majority Approach (King Case):
Oral or written
Promise to give some property to a charitable institution
Consideration or reliance (not detrimental reliance)
g. Minority Approach (Restatement 90, Section 2)
Only requires a clear and definite promise
No consideration or reliance necessary

G. PRE-ACCEPTANCE RELIANCE
a. The Offeror can revoke up until acceptance

b. In both cases, acceptance did not occur until after the contract was
AWARDED and such award was COMMUNICATED back to the Offeror !
c. Baird Rule (TRADITIONAL): Mere use by the offeree (Gen. Contractor) of the offerors
(Subcontractor) bid will NOT make the offer irrevocable (SUB CAN REVOKE THE BIDOFFER)

General contractor had to use bid, owner accepts, and communicate it back to
the subcontractor prior to revocation
GENERAL CONTRACTOR PREFERRED
Merchants SHOULD negotiate in good faith for option k or Firm offer
No award of the job OR No communication = NO ACCEPTANCE OF THE
BID AS BINDING
PROTECTS THE SUBCONTRACTOR

d. Drennan Rule (MODERN): Mere use by the offeree of the offerors bid WILL make the offer
irrevocable
(SUB CANNOT REVOKE THE BID-OFFER) Promissory Estoppel

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1
1
1

Yes award of the job but NO communication = NO ACCEPTANCE OF

THE BID AS BINDING
Unfair to bind one party and not the other
REASONABLE reliance and forbearance
PROTECTS THE GENERAL CONTRACTOR

EXCEPTIONS:
Bid was a mistake? Gen. Contractor known or should have known of the gross error in the
bid
Bid had express revocability clause? Courts will apply the revocability clause!
Bad Faith conduct by general contractor? Trying to make an unjust profit.
a "bid shopping" - trying to find someone who will do the work more cheaply while
continuing to claim that the original bidder is bound
a "bid chopping" - the attempt to renegotiate with the bidder to reduce the price.
Bid was an ADVERTISEMENT/ESTIMATES? and NOT AN OFFER, ads arent usually enforced
without words of limitation

VII.
RESTITUTION
A. Under the claim of unjust enrichment : A person who has been unjustly enriched at the expense
of another is required to make restitution to the other
B. UNJUST ENRICHMENTWhere one renders services of value to another with the receivers
KNOWLEDGE & CONSENT, the presumption is that the one rendering the services expects to be
compensated, and that the one whom the services are rendered intends to pay for the same, and
so the law implies a promise to pay EXAMPLE: hired someone to cut grass and they accidentally cut
neighbors grass, neighbor is
1. Quantum Valebat-reasonable value of the goods
2. Quantum Meruit- reasonable value of the services
3. ELEMENTS:
a. BENEFIT THAT WOULD NORMALLY EXPECT COMPENSATION
b. KNOWLEDGE OF BENEFIT BY RECIEVER
c. ACCEPTANCE/RETENTION OF THE BENEFIT

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d. UNFAIR/UNJUST IF BENEFIT IS NOT PAID FOR
C. INTRA-FAMILY CLAIMS Presumption is that services rendered among family members are
gratuitous because of lack of consideration. Presumption can be overcome by proving:
1. One member gives up established homestead, over substantial distance or
2. rendering unduly burdensome services, over a long period of time
3. Proof of express or implied k by clear and convincing evidence and that the value
that is sought is not disproportionate to the reasonable value of services
(quantum meruit is awarded)
D. RELIANCE DAMAGES v. EXPECTATION INTEREST v. RESTITUTION DAMAGES
1. Reliance Damages: Promissory Estoppel. Courts may limit the damages to only
what you relied on for preparation of the k. LIMITED. BEFORE THE PROMISE; $ to get
me back where I was before I made the K
2. Expectation Interest: Express Contract. Courts will make you whole by
awarding what you expected had the contract not been breached AFTER THE
CONTRACT
3. Restitution by Unjust Enrichment : Quasi/Implied In Law Contract. Courts will
assess and award the reasonable value of the goods/services that the unjust
enricher benefitted from.
4. GENERAL RULE: Where one renders services of value to another with his knowledge
and consent, the one rendering the services intends to be paid, and the receiver
intends to pay, so the law implies a promise to pay
E. EXPRESS CONTRACT
1. Parties should negotiate in good faith for this; preferred
2. Expectation Damages will be granted in the event of a breach
3. Includes: Essential/Key Terms & Elements (Offer, Acceptance, Mutual Assent, Consideration)
F. QUASI CONTRACT/ IMPLIED IN LAWCreated by the court, equitable fairness doctrine
regardless of parties lack of relationship
1. Request made for service Come build something, and then person decides not to pay
peson
2. Restitution Damages
3. Officious ConductA person cannot confer a benefit upon another person against their will
which they did not request or knowingly accept
Restatement of Restitution 116 Protection of Health:
1. Servicsor Acting Inofficiously
2. With intent to charge
3. Necessary to prevent the other from suffering bodily pain/harm
4. The other party was unable to give consent, mental impairment

117 Protection of Ones Property:

1. Lawful possession
2. Intervene without request from owner
3. Reasonable necessity
4. Intent to charge
G. Construction K- In order for a subcontractor to recover from an owner, they MUST PROVE BOTH:
1. That the Owner unjustly enriched from the subcontractors labor AND
2. That the subcontractor has exhausted all legal remedies against the gen. contractor such as
mechanics lien waiver
3. Subcontractor files a lien against the owners property if they havent been paid for their
work. But the property has to be foreclosed on before they can collect.
4. LIEN WAIVER:

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Prevents a SC from suing an owner
GC doesnt get paid until waiver is recd
PROTECTS THE OWNER
H. IMPLIED IN FACT Created by one or both parties conduct
1. Includes a PROMISE
2. Looks like an express k
3. Expectation Damages ONLY IF YOU PROVE WHAT YOU EXPECTED but most likely will receive
Restitution
4. ELEMENTS:
a. REQUEST for services AND/OR
b. CONDUCT that implies contract (relationship between parties)
I. PROMISSORY RESTITUTIONRestatement 82(2) p. 311/312
1. PREVIOUS MATERIAL BENEFIT, SUBSEQUENT PROMISE TO PAY
2. FOUR (4) EXCEPTIONS:
a. DEBT barred by SOL. EXPRESS(promise to pay) OR IMPLIED (start to make payments)
4 years to sue for the debt
Subsequent promise to pay after SOL runs out IS ENFORCEABLE
b. DEBT discharged by bankruptcy
Bankruptcy already declared
After the EXPRESS promise to pay is made, the debt is revived ONLY for the
new promised amount
c. DEBT incurred by minors
Parent has legal obligation to pay/care for their child
d. MATERIAL BENEFIT RULE 86 (DOES NOT APPLY IN N.C.)
If a person receives a material benefit from another, other than gratuitously,
promise to pay the person is enforceable
ASK:
1. Gratuitous
2. Benefit received to a 3rd party NOT directly to the promisor Exception:
Yes to 3rd party under 71
3. Value of services is DISPORPORTIONATE to the REASONABLE value of
the services
4. Promise to pay an additional sum on an existing obligation

A.
B.
C.

D.
E.

VIII.
STATUTE OF FRAUDS
IF THE BAR EXAM ASKS IF THIS K IS ENFORCEABLE, TALK ABOUT SOF!
REQUIRESA contract to be in signed writing
APPLIES TO Contracts over $500 for the sale of goods
PURPOSE In order to reduce fraud, certain agreements must be evidenced by a writing signed by
the parties sought to be bound to prevent having to leave determination to parole or extrinsic
evidence.
SOF can perpetuate more fraud by NOT enforcing a valid agreement simply because it is not in
signed writing.
PARTIES BEST ARGUMENT
1. Plaintiff brings the action wanting the SOF to NOT apply but rather a k by conduct (wants to
be out of the SOF)
2. Defendant raises SOF essentially arguing that the oral agreement is unenforceable (wants it
to be inside the SOF)
3. EXCEPTIONS TO DEFENSE: Defendant admits there was a contract in any way

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F.

STEPS TO DETERMINING WHETHER SOF APPLIES

1. DOES THE K FALL IN BETWEEN MYY LEGS?? (IF NO, THE PLAINTIFF IS HAPPY
BECAUSE THEY DONT NEED A SIGNED WRITING BUT THEY NEED EXTRINSIC
EVIDENCE)
M- In consideration of MARRIAGE
M- MODIFICATION of k. Different results under the c/l and U.C.C
Y- Ks which cannot be performed within 1 year from the making of thereof

No matter how remotely possible, if it is POSSIBLE to be performed within a

year, it doesnt require signed writing,
Date k made? Nature of performance? Possible to complete performance in 1
year?
Life Time K- Majority Rule: needs to be in writing because either
party could die at any time; Minority Rule: Lifetime would be
considered to be atleast 20 years so it would have to be in writing
Focus is on performance v. termination(Breach) under 1 year
provision

L- For the transfer of LAND coupled with VALUABLE IMPROVEMENTS + can only request

specific performance)
E- EXECUTOR of a will to pay a debt of the estate/decedent out of pocket
G- For the sale of GOODS above a certain value above $500 NEED A SIGNED WRITING
S- 1 party acts as a SURETY/GUARANTOR to answer for the debt of another; not usually SOF
unless the promise was made to a creditor to whom the debt is owed.
2. IF YES? THEY MUST SATISFY THE SOF BY
1. Writing (within 1 document) signed by the party against whom
enforcement is sought (prove the defendant is wrong)
2. Key Terms (c/l) OR Quantity Term (ucc)
LINKING DOCUMENTS to satisfy the signed writing requirement
when you dont have just 1 document that satisfies
BROAD- SAME SUBJECT MATTER TEST- does not require docs
reference each other, as long as dealing with same subject
NARROW- SPECIFIC REFERENCE TEST- the docs must reference
each other THIS WILL BE THE DEFENDANT'S BEST ARGUMENT
UCC: OUTPUT K or REQUIREMENT K P. 481-483: STILL MEETS
THE UCC QUANTITY REQUIREMENT.
a. Requirement K: Seller will produce all that the buyer requires; presents a problem
because quantity isnt clearly articulated but modernly still okay by courts because
you can determine what the buyer requires by other evidence
BENEFITS THE BUYER they will always have goods
b. Output K: buyer promises to purchase the entire production/output that the seller
makes
BENEFITS THE SELLER- they will always have a customer
3. IF NO? THEY MUST PLEAD AN EXCEPTIONparties will be taken outside the SOF:
(3)
1. Part or Full PerformanceBuyers conduct in reliance MUST be reasonable and
substantial; prevents unjust enrichment
Part Performance - PAYMENT/DEPOSIT delivered and accepted
Performance for Land
i.
Improvements
ii.
Possession

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iii.

Seeking Specific Performance, only can claim money damages for

independent Tort claim
iv.
Only can get land, no monetary damages
Full Performance
2. Tortious Conduct/Misrepresentation- Fraudulent/Bad Faith
3. Promissory Estoppel (remember EXPECTATION DAMAGES)
G. EXCEPTIONS to SOF under the UCC (Comment 6): (+3)
1. Specially Manufactured Goods 2-207 (3)(a): used by the SELLER
a. The goods are specially manufactured for the Buyer AND
b. The goods are not suitable for sale to others in the ordinary course of sellers
business
2. Admissions Exception 2-201 (3)(b): Testimony, court appearance, etc.
a. Cannot raise the defense of SOF if they admit to making the agreement
3. Merchant Confirmation Exception 2-201(2):
a. Requirements:
1. b/t merchants
2. confirmation sent within a reasonable time after oral or written agreement
3. must be sufficient against sender (indicates confirming existence of k) SIGNED
indicates a K by the key terms
be signed by the sender
and show the quantity of goods
4. Recipient has reason to know of its contents
5. Recipient fails to give written notice of objection within 10 days- if fail to send,
cant use SOF as defense
6. If addl or diff term in confirmation, do 2-207 analysis

IX.

PRINCIPLES OF INTERPRETATION
(DIFFERING MEANINGS OF CONTRACT TERMS)
A. How the court interprets the ambiguous language will determine whether or not there
is a breach of k
B. RESOLVE AMBIGUITY IN 1-2-3 !!!
1. IS THE LANGUAGE AMBIGUOUS? (2 TYPES OF AMBIGUITY)
a. LATENT: Is the latent ambiguity subject to reasonable alternative meaning?
Ex: Oranges. Orange Tick Tacs or Real Oranges?
APPLY:
1. Plain Meaning Rule/Four Corners of the Document
Approach (Williston)Judge looks at the document and
determines whether the document is ambiguous. Judges own
experience and understanding. (Restrictive View).
2. Agreement PLUS Extrinsic Relevant Evidence(Corbin)Judge looks at the document AND allows extrinsic evidence to
understand the parties intended meaning.
b. PATENT; no extrinsic evidence needed because on its face there is an obvious
mistake.
2. IF LATENT AMBIGUITY IS SUBJECT TO REASONABLE ALTERNATIVE MEANING
UNDER EITHER APPROACH, THEN GO TO WHOSE MEANING CONTROLS INTERPRETATION?
(3 JURISDICITONAL VIEWS)

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a. Subjective
If the partys interpreted meanings were materially different, no k.
Courts required meeting of the minds
Courts will look to what both parties intended to
b. Objective (Williston)
Ambiguity is interpreted by the reasonably prudent person standard
Both parties may get what they dont want
c. Modified Objective/Innocent Party Rule (Corbin) (SIMILAR VIEW TO
UCC)
If A knows or has reason to know of Bs subjective interpretation, Bs
meaning will be construed against A favoring B as the more innocent
party.
If neither party has reason to know, then NO K.
C. REASONABLE EXPECTATION DOCTRINE CAN BE USED UNDER OBJECTIVE WILLSTON
OR INNOCENT PARTY RULE (Must be ambiguity or K of Adhesion--unfair bargaining
process and one party has more power than the other and has drafted the K)The parties
obligations consist of the dickered terms (transaction specific terms) and only the boilerplate
terms that would be consistent with the reasonable expectation of the purchaser.
Unreasonable terms are unenforceable, meaning if the seller knew or had reason to know
that the purchaser wouldnt assent if they were aware of unreasonable terms.
a. Must be an Ambiguity before the courts will apply the doctrine- if an
ambiguous term is included in the k, its construed against the drafter OR
b. With a Contract of adhesion- no bargaining, no negotiation Take it or leave it
p. 373
c. Evidences terms explicitly agreed to or is manifestly inconsistent with the
purpose of the transaction
Restatement View: where the other party has reason to believe that the party
manifesting such assent wouldnt do so if he knew that the writing contained a
particular term, the term is no part of the agreement
D. OBLIGATION OF GOOD FAITH
a. Common Law: Honesty in fact in the conduct of the transaction concerned
b. Merchants: Honesty in fact and the observance of reasonable commercial standards
of fair dealing in the trade
X.
PAROL EVIDENCE RULE
A. Generally, the judge will invoke the parol evidence rule to admit or deny certain extrinsic
evidence when there is a dispute in the interpretation of terms within an agreement.
B. UCC DistinctionWhen parties to a contract have mutually agreed to incorporate
(or integrate) a final version of their entire agreement (complete integration) A
party cannot introduce contemporaneous oral that contradicts or supplements
but they can introduce ALL contemporaneous written. This is different from the
common law approach.
1. A WRITING INTENDED AS THE FINAL EXPRESSION OF BOTH
PARTIES INTENT?
IF YES,
2. DETERMINE IF THE INTEGRATION IS COMPLETE or PARTIAL?
a. Williston (COMMON LAW)- Four Corners- Considered complete
integration if a merger clause is present. This document is final.
b. Corbin- (UCC) Four Corners + Extrinsic Evidence solely to
determine if the writing is complete OR partial integration. Even

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with a merger clause, more likely than not there is a complete
integration
a. Complete Integration: Includes all key/essential terms ;
no extrinsic evidence. If it is complete, the plaintiff may
plead an exception.
b. Partial Integration: All key/essential terms are not there;
extrinsic evidence allowed. When the writing is intended to
be final only with respect to a part of their agreement,
(partial) the writing cannot be contradicted.
3. IF PARTIAL, WHAT PAROL EVIDENCE CAN BE ADMISSIBLE?
a. No oral modifications clause may bar subsequent parol evidence
that would normally not be subject to parol evidence rule.
C. COURSE OF PERFORMANCE V. COURSE OF DEALINGS V. TRADE USAGE
a. Course of performance the pattern of conduct between the parties within the
contract at issue
b. Course of dealing pattern of conduct concerning previous transactions prior to the
contract at issue
c. Usage of Trade- any practice having such regularity within the industry that it would
be justified to be observed in the contract at issue
d. **These are used when the court chooses to suppliment
D. WAIVER
a. "Waiver" is defined as the "voluntary relinquishment of a known right." A waiver must
be intentional, with full knowledge of all the facts.
b. Waiver v. Course of Performance
UCC Distinction:
If the activity has only happened one time, its a waiver.
If the activity has happened more than once, its a course of performance.
(two times is enough)
No oral Modification clause: no changes..shall be validunless reduced to writing and signed by the
parties hereto
Subsequent=modification of contract