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I.

Law
a. What is the applicable law? Common law or UCC/Sale of goods?
b. Definition of goods- UCC 2-105- all things movable at the
time they are identified as the goods to be sold under the
contract.
c. Definition of Sale- UCC 2-106- a contract in which title to
goods passes from the seller to the buyer for a price
d. Definition of Merchant- UCC 2-104- one who regularly deals
in goods of the kind sold or who otherwise by his occupation
holds himself out as having knowledge or skill peculiar to the
practices or goods involved.
e. Good Faith and Fair Dealing required by 1-304
i. Definition of Good Faith- UCC 1-201- honesty in fact
and the observance of reasonable commercial standards
f. Mixed Contracts- If a sale involves both goods and services
(e.g., a contract to paint a portrait), a court will determine which
aspect is dominant and apply the law governing that aspect to
the whole contract. However, if the contract divides payment
between goods and services, then Article 2 will apply to the sale
portion and the common law will apply to the services portion.
g. Types of Contracts, Ways to Group
i. As to Formation
1. Express- formed by language, oral or written
2. Implied by Fact- formed by manifestations of
assent other than oral or written language, i.e., by
conduct
3. Quasi-Contract or Implied in Law- Not a contract.
Avoids unjust enrichment by permitting the plaintiff
to bring an action in restitution to recover the
amount of the benefit conferred on the defendant
ii. As to Acceptance
1. Bilateral Contract- Promise for a promise
2. Unilateral Contract- the offeror requests
performance rather than a promise
a. Ex: Brooklyn Bridge Hypo
3. Modern View- Most Contracts are Unilateral
a. Acceptance by Promise or Start of Performance
i. Under UCC and 2nd Restatement, unless
clearly indicated otherwise by the
language or circumstances, all offers are
indifferent offers, which means that
they may be accepted by promising or
beginning performance.
ii. 2 Exceptions where K is unilateral
1. offeror clearly (unambiguously)
indicates that completion of

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performance is the only manner of
acceptance
2. where there is an offer to the public, such as
a reward offer, which so clearly
contemplates acceptance by performance
rather than a promise that only the
performance requested in the offer will
manifest acceptance.

II.

iii. As to Validity
1. Void- Without legal effect from the beginning.
2. Voidable- one or both parties may elect to avoid.
3. Unenforceable- otherwise valid, but may not be enforceable due
to defenses outside of contract formation.
Formation
a. Objective Doctrine/ Reasonable Person Standard is always used in the
formation.
i. Lucy v Zimmer- Case where wanted to say the contract was just a joke,
but to a reasonable person it wasnt.
ii. Hardigane McKittrick- Case where rushed out of his office by
implying K, but didnt really mean it. Still a K.
b. Offer
i. Was there an expression of a promise, undertaking, or commitment to
enter into a contract?
1. Language- The language used may show that an offer was or was
not intended. Technical language such as I offer or I promise is
useful to show that an offer was made, but it is not necessary. Also,
certain language is generally construed as merely contemplating an
invitation to deal, preliminary negotiations, or feelers, rather
than being an offer. This includes phrases such as I quote, I am
asking $30 for, and I would consider selling for. No mechanical
formula is available.
2. Surrounding circumstances- where the statement is made in jest,
anger, or by way of bragging, and the statement is reasonably
understood in this context, it will have no legal effect (STILL
SUBJECT TO REASONABLE PERSON STANDARD)
3. Prior Practice and Relationship- In determining whether certain
remarks constitute an offer rather than preliminary negotiations, a
court will look to the prior relationship and practice of the parties
involved.
4. Method of Communication:
a. Broad Communications Media- The broader the
communicating media, the more likely it is that the courts
will view the communication as merely the solicitation of
an offer.
b. Advertisements, etc.- Advertisements, catalogs, circular
letters, and the like containing price quotations are usually

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construed as mere invitations for offers. Typically, these are
not considered offers because they usually are indefinite as
to quantity and other terms, and addressed to the general
public. However, in certain situations, courts have treated
advertisements as offers if the language of the
advertisement can be construed as containing a promise,
the terms are certain and definite, and the offeree(s) is
clearly identified. Price quotations also may be considered
offers if given in response to an inquiry.
5. Industry Custom- The courts will also look to generally accepted
custom in the industry in determining whether the proposal
qualifies as an offer.
ii. Were there certainty and definiteness in the essential terms?
1. Identification of the Offeree- a statement must sufficiently
identify the offeree or a class to which she belongs
2. Definiteness of Subject Matter
a. Requirements for specific Types of Contracts
i. Real Estate- must identify the land and the price
terms. The land must be identified with some
particularity but a deed description is not required.
ii. Sale of Goods- the quantity being offered must be
certain or capable of being made certain.
1. Requirement or Output ContractsAlthough no specific quantity is mentioned
in offers to make these contracts, the offers
are sufficiently definite because the quantity
is capable of being made certain by
reference to objective, extrinsic facts.
a. Quantity Cannot Be Unreasonably
Disproportionate- It is assumed that
the parties will act in good faith;
hence, there may not be a tender of
or a demand for a quantity
unreasonably disproportionate to
i. any stated estimate, or in the
absence of a stated estimate
ii. any normal or otherwise
comparable prior output or
requirements
b. Established Businesses v. New
Businesses- A number of courts have
sometimes refused to enforce such
agreements if the promisor did not
have an established business. The
courts in these cases reason that, due
to the lack of any basis for

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estimating quantity, the agreement is
illusory or the damages too
speculative. Article 2 avoids this
problem by reading a good faith
agreement into the contract; i.e., the
promisor must operate his plant or
conduct his business in good faith
and according to commercial
standards of fair dealing in the trade
so that his output or requirements
will approximate a reasonably
foreseeable figure.
2. Reasonable Range of Choices- An offer
allowing a person to specify an item within a
reasonable range of choices may be
sufficiently definite to result in a contract if
accepted.
iii. Employment and Other Services- In contracts for
employment, if the duration of the employment is
not specified, the offer, if accepted, is construed as
creating a contract terminable at the will of either
party. For other services, the nature of the work to
be performed must be included in the offer.
b. Missing Terms- the court can supply reasonable terms for
those that are missing (UCC 2-204, 2-305) only where they
are consistent with the parties intent as otherwise
expressed.
i. Price- Except in contracts for real property, the
failure to state the price does not prevent the
formation of a contract if the parties intended to
form a contract without the price being settled
1. Article 2 Gap Filler- the price will be a
reasonable price at the time of delivery if
a. Nothing is said as to price.
b. Price is left to be agreed to by the
parties and they fail to agree.
c. Price is to be fixed by third party or
some other occurrence and it is not
so set.
2. Price Fixed by Party in the Future Under
Article 2- the party to whom the contract
gives the right to fix the price must act in
good faith. If that party does not fix the price
in good faith, the other party may either
cancel the contract or fix a reasonable price
herself. UCC 2-305

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ii. VAGUE Terms (as opposed to missing)- The
presumption that the parties intent was to include a
reasonable term goes to supplying missing terms.
However, the presumption cannot be made if the
parties have included a term that makes the contract
too vague to be enforced. The problem then is that
the parties have manifested an intent that cannot be
determined.
1. Cured by Part Performance
2. Cured by Acceptance- If uncertainty results
because the offeree is given a choice of
alternative performances, the offer becomes
definite when the offeree communicates her
choice
3. Cured by Focus On Contract- even if the
offer lacks certainty, the problem can be
cured if there is some way in which the offer
is capable of being made certain, e.g., by
part performance or acceptance.
iii. Was there communication of the above to the offeree?
c. Termination of Offer
i. Death or Insanity of Either Party- Restatement 48- It is not necessary
that the death or insanity be communicated to the other party
ii. Lapse of Time
1. must accept offer with Specified or Reasonable Time. Where the
offers terms are unclear as to time (by return mail) the time
limit is what a reasonable person in the offerees position would
have assumed.
2. If a specified time period is given, that period commences when
the offer is received by the offeree. If the offer is delayed in
transmission and this fact is or should have been apparent to the
offeree, the offer terminates at the time it would have expired had
there been no delay. All relevant facts must be considered in
determining whether this knowledge is present. These include, e.g.,
date of letter, postmark, and any subsequent statements made by
the offeror.
iii. Revocation
1. Direct- from offeror to offeree
a. By Publication- Can revoke in similar publication through
which offer was made. Effective when published, not when
received.
2. Indirect- must receive
a. Correct Information from
b. a reliable source
c. of acts of the offeror that would indicate to a reasonable
person that the offeror no longer wishes to make the offer.

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3. When is a communication received?
a. Common Law- Rstmt Contracts 68- when it comes into
the possession of the person addressed (or of someone
authorized by him to receive it) or when it is deposited in
some place authorized as the place for this or similar
communications to be deposited. Doesnt have to be read.
b. UCC- 1-202- a person receives notice when (i) it comes to
his attention, or (ii) it is delivered at a place of business
through which the contract was made or another location
held out by that person as the place for receipt of such
communications
4. Limitations on Revocation
a. Option Contract- separate consideration to keep the
contract open.
i. Timely Acceptance- must be accepted within the
time specified or, if no time is specified, within a
reasonable time. Often, an option contract specifies
that the offer must be accepted within the option
period; i.e., the offer terminates when the option
expires. In the absence of specific language stating
when the offer terminates, the power of acceptance
arguably survives the option period, but courts often
treat the option period as the offer period so that at
the end of that time, the option expires and the offer
lapses
ii. Mail Box Rule does not apply to option contract
acceptances.
b. Merchants Firm Offer- UCC 2-205
i. A merchant
ii. Offers to buy or sell goods in a signed writing; and
iii. The writing gives assurances that it will be held
open
iv. The offer is not revocable for lack of consideration
during the time stated, or if no time is stated, for a
reasonable time (but in no event may such period
exceed three months)
1. Form Supplied by Oferee- UCC 2-205- If
the term assuring that the offer will be held
open is on a form supplied by the offeree, it
must be separately signed by the offeror.
c. Detrimental Reliance- Restatement 87- Where the offeror
could reasonably expect that the offeree would rely to her
detriment on the offer, and the offeree does so rely, the
offer will be held irrevocable as an option contract for a
reasonable length of time. May be limited to those
situations in which the offeror would reasonably

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contemplate reliance by the offeree in using the offer before
it is accepted.
d. Beginning Performance in Unilateral Contract- the
unilateral contract will not be formed until the total act is
complete. However, once the offeree begins to perform, she
is given a reasonable time to complete performance, during
which time the offer is irrevocable.
i. Preparations to perform- Do not count until
performance has started. Substantial preparations
might count as detrimental reliance sufficient for
detrimental reliance (above).
ii. Offeror refuses to Accept Performance- 2nd
RESTATEMENT 45- If the offerors cooperation
is necessary for performance, his withholding of it
upon the tender of performance is the equivalent of
commencing performance
e. Beginning Performance- Offer Indifferent as to Manner
of Acceptance- a bilateral contract may be formed upon the
start of performance by the offeree. Once the offeree begins
performance, the contract is complete and revocation
becomes impossible. This allows offeror to sue for breach
if performance is not completed.
iv. Rejection
1. Express Rejection- 2nd Restatement 36- statement by offeree
that she will not accept contract. terminates offer.
2. Counteroffer as rejection Restatement 39
a. Counteroffer with Express rejection (not at that price, but
yes to this price)
b. Conditional Acceptance (yes, but only if xyz)
c. Mere Inquiry- An inquiry will not terminate the offer
when it is consistent with the idea that the offeree is still
keeping the original proposal under consideration. The test
is whether a reasonable person would believe that the
original offer had been rejected.
3. A Rejection is effective when received by offeror.
4. Revival of Offer- If an offer is rejected, the offeror may restate the
same offer and create a new power of acceptance.
5. Rejection of Option- Restatement 37- a rejection of or a
counteroffer to an option does not constitute a termination of the
offer. The offeree is still free to accept the original offer within the
option period unless the offeror has detrimentally relied on the
offerees rejection.
v. Destruction of Subject Matter- Restatement 36
vi. Subject Matter Becomes Illegal- Restatement 36
d. Acceptance
i. Who may Accept

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1.