MISTAKE

Re.2d Sec. 152 Mutual Mistake (of both parties)

Voids the K if it causes a material effect on the agreed upon exchange of
Performances, unless the adversely affected party bears the risk under Sec. 154.
(does not apply when both parties took a gamble on the uncertainty of the
grounds which led to the mistake – both took a gamble)

Re. 2d Sec. 153 Mistake of One Party Voids Contract

If mistake has: a) a material effect on the agreed upon exchange adverse to him,
and b) not exempt by Re.2d Sec. 154, and c) enforcement would be
unconscionable, or d) other party had reason to know of, or caused the mistake.

Re.2d Sec. 154 Party Bears Risk of Mistake

If: a) risk allocated by agreement of the parties, or b) party is aware of his
limited knowledge with respect to facts on which mistake is made, but treats his
limited knowledge as sufficient, c) risk allocated by court because it is
reasonable to do so.

Re.2d Effect of Misunderstanding to Assent

No mutual assent if parties mean different things and a) none knows/probably
knows meaning of other, b) each knows/probably knows meaning of other.
Meanings operate if one doesn’t/has no reason to know different meaning by
other, vice versa.

ACCEPTANCE
I. Of unilateral conracts
Re.2d Sec. 54 Acceptance by Performance; Necessity of Notification to
Offeror
(1) Where offer invited performance as acceptance, no notification is necessary
to make such acceptance effective unless offer requests it
(2) If 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:
a. the offeree exercises reasonable diligence to notify the offeror of
acceptance or
b. the offeror learns of the performance within a reasonable time, or
c. the offer indicates that notification of acceptance is not required

II. Shipment of Goods as Acceptance

U.C.C. 2-206 (1) (b)
Order “for prompt or current shipment” shall be construed as inviting
acceptance either by a prompt promise to ship or by “the prompt or current
shipment of conforming nonconforming goods.” Under the Code the buyer’s
revocation comes too late if the seller has promptly shipped.

U.C.C. 2-206(2)
Where performance is reasonable mode of acceptance and the offeror is not
notified within a reasonable time he may treat the offer as lapsed.
III. Silent Acceptance

Re.2d Sec.69 Acceptance by Silence or Exercise of Dominion

(1) Where an offeree fails to reply to an offer, his silence and inaction operate as an
acceptance if:
a. the 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.
b. The offeror has stated or given the offeree reason to understand
that assent may be manifested by silence or inaction, and the
offeree in remaining silent and inactive intends to accept the offer.
c. Because of previous dealings or otherwise, it is reasonable that the
offeree should notify the offeror if he does not intend to accept.

IV. BATTLE OF THE FORMS

U.C.C. 2-207 Additional Terms in Acceptance or Confirmation

(1) A definite and seasonable expression of acceptance or a written
confirmation which is sent within a reasonable time operates as an
acceptance even though it states terms additional to or different from those
offered or agreed upon, unless acceptance is expressly made conditional on
assent to the additional or different terms.
(2) Additional terms are to be construed as proposals for addition to the
contract. Between merchants such terms become part of the contract
unless:
a. the offer expressly limits acceptance to the terms of the offer;
b. they materially alter it; or
c. notification of objection to them has already been given or is given
within a reasonable time after notice of them is received.
(3) Conduct by both parties which recognizes the existence of a contract is
sufficient to establish a K for sale although the writings of the parties do not
otherwise establish a K. In such case the terms of the particular K
consist of those terms on which the writings of the parties agree,
together with any supplementary terms incorporated under any provisions
of this act.

V. OPTION CONTRACTS

Re.2d Sec. 45 Option Contract Created by Part Performance or Tender

(1) Where an offer invites an offeree to accept by rendering a performance and
does not invite a promissory acceptance, an option K is created when the
offeree tenders or begins the invited performance or tenders a beginning of
it.
(2) The offeror’s duty of performance under any option K so created is
conditional on completion or tender of the invited performance in
accordance with the terms of the offer.
Note: the offeree is not bound to continue performance under Sec. 45;
can withdraw because it is an option K. In any unilateral K the offeree
retains the right to stop.

VI. PROMISSORY ESTOPPLE

Re.2d Sec. 90 Promise Reasonably Inducing Action or Forebearance

 (1) A promise which the promisor should reasonably expect to induce action or
forebearance on the part of the promisee or a third person and which does
induce action or forebearance is binding if injustice can be avoided only by
enforcement of the promise. The remedy granted for breach may be limited
as justice requires.
(2) A charitable subscription or a marriage settlement is binding under sub (1)
without proof that the promise induced action or forebearance.

OFFERS
I. REVOCATION

Re.2d Sec. 43 Indirect Communication of Revocation

Power of acceptance is terminated when the offeror takes definite action
inconsistent with an intention to enter into the proposed contract and the offeree
acquires reliable information to that effect.

Death Revokes the Offer

Re.2d Sec. 48 Death or Incapacity of Offeror or Offeree

An offeree’s power of acceptance is terminated when the offeree or offeror dies
or is deprived of legal capacity to enter into the proposed contract.
Note: it is not necessary that death be communicated to the other party.

Irrevocable Offer

U.C.C. 2-205 Firm Offers

An offer by a merchant to buy or sell goods in a signed writing which by its
terms gives assurance that it will be held open 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 of irrevocability exceed three months; but any
term of assurance on a form supplied by the offeree must be separately signed
by the offeror.
Note: under UCC only a “merchant can make a firm offer, merchant is not only a
“person who deals in goods of the kind” but also one who “by his occupation
holds himself out as having special knowledge or skill peculiar to the practices
or goods involved in the transaction.

II. REJECTION
Re.2d Sec. 38 Rejection
(1) an offeree’s power of acceptance is terminated by his rejection unless the
offeree manifested a contrary intention.
(2) A manifestation of intention not to accept an offer is a rejection unless the
offeree manifests an intention to take it under further advisement.

Re.2d Sec. 39 Counter Offers

(1) a counter offer is an offer made by an offeree to his offeror relating to the
same matter as the original offer and proposing a substituted bargain
differing from that proposed by original offer.
(2) An offeree’s power of acceptance is terminated by his making of a counter-
offer, unless the offeror has manifested a contrary intention or unless the
counter offer manifests a contrary intention of the offeree.
FORMATION OF CONTRACTS

U.C.C. 2-204 Formation in General

(1) A contract for the sale of goods may be made in any manner sufficient to
show agreement, including conduct by both parties which recognizes the
existence of such a K.
(2) An agreement sufficient to constitute a K 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 K for sale does not fail for
indefiniteness if the parties have intended to make a K and there is a
reasonably certain basis for giving an appropriate remedy.

U.C.C. 2-305 Open Price Term

(1) Contract can be concluded though price not settled; if not settled by
delivery then it is a reasonable price if:
a. nothing said to price,
b. price left to be agreed, never agreed,
c. price to be fixed to some standard, but it is never chosen.
(2) price to be fixed by seller to be done in good faith.
(3) If price to be fixed other than by agreement, and it is not due to one party,
the other may cancel, or fix a reasonable price.
(4) Where parties intend not to be bound unless price is agreed and it is not,
there is no K. Buyer must return goods (if cannot-then pay reasonable
value); seller must return any portion of price paid.

CONSIDERATION

Re.2d Sec. 71 Requirement of Exchange; Types of Exchange

(1) to constitute consideration, performance or return promise must be
bargained for.
(2) Performance or return promise bargained for if sought by promisor in
exchange for his promise and is given by the promisee for that promise.
(3) performance may consist of:
a. act other than a promise
b. a forebearance
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.

Re.2d Sec. 79 Adequacy of Consideration; Mutuality of Obligation

If requirement of consideration is met there’s no additional requirement of:
a. gain, advantage, benefit to the promisor or a loss, disadvantage, detriment to
the promisee, or
b. equivalence in the values exchanged, or
c. “mutually of obligation.”

Re.2d Sec. 81 Consideration as Motive or Inducing Promise

(1) The fact that what is bargained for does not itself induce the making of a
promise does not prevent it from being consideration for the promise.
(2) 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.
Note: Contract must be bargained for and sought after by the promisor.
 Forbearance to Sue
Re.2d Sec. 74 Settlement of claims
(1) Forbearance to assert or the surrender of a claim or defense which proves to
be invalid is not consideration unless:
a. claim/defense is in fact doubtful because of uncertainty as to facts or
law, or
b. forbearing/surrendering party believes claim/defense may be fairly
determined to be valid

DAMAGES

SELLER REMEDIES
UCC 2-706 Resale (same as cover except seller sells to another person, then recovers damages).
UCC 2-708 Recover (market price-contract price at the time and place of tender) also, if item is of no
value as a whole to sell to someone else- he gets whatever he lost, plus the profits. If its salvaged
value, you can subtract the value of the scraps and get difference.
Full Price (specific performance)

RELIANCE

Restatement Section 349 Damages Based on Reliance Interest

The injured person has a right to damages based on his relience interest, including expenditures made in
preparation for performance or in performance, less any loss that the party in breach can prove
w/reasonable certainty the injured party would have suffered had the contract been performed.

REMEDIES IN EQUITY

Restatement 360 : factors affecting adeqaucy of damages: In determining whether the remedy in
damages would be adequate the following circumstances are significant: a) the difficulty in
proving damages with reasonable certainty, (b) the difficulty of procuring a suitable substitute
performance by means of money awarded as damages, and (c) the likelihood that an award of
damages could not be collected.

UCC 2-716(1) Specific Performance Specific Performance may be decreed where goods are
unique or in other proper circumstances