Contracts I FINAL-2

*All items highlighted have to be reviewed
Contracts I Outline
Table of Contents
Table of Contents.............................................................................................................................1
Sources of Contract Law..................................................................................................................4
Objective vs. Subjective Theories of Contract................................................................................4
Case: Ray v. William G. Eurice Bros., Inc..............................................................................5
Case: Leonard v. PepsiCo........................................................................................................5
Case: Lucy v. Zehmer..............................................................................................................5
What is a contract/ Contract formation............................................................................................6
Elements in a Transaction............................................................................................................6
When is a contract formed?.........................................................................................................6
Agreements to Agree...................................................................................................................7
Case: Quake Construction v. American Airlines.....................................................................8
Case: Walker v. Keith..............................................................................................................8
Types of Contracts.......................................................................................................................9
Offer/ Acceptance..........................................................................................................................11
What is an offer?........................................................................................................................11
How is commitment of promisor shown?..................................................................................12
Certain Definite Terms/Specific terms......................................................................................12
Why wouldn’t an offer still be on the table?..............................................................................12
Mailbox Rule.............................................................................................................................13
Case: Lonergan v. Scolnick...................................................................................................13
Counteroffers.............................................................................................................................13
Revocation of an Offer/Termination of the Power of Acceptance............................................14
Case: Normile v. Miller.........................................................................................................14
Acceptance.................................................................................................................................15
Battle of the Forms.........................................................................................................................15
Case: Princess Cruises, Inc. v. General Electric Co..............................................................16
Case: Harlow v. Jones............................................................................................................19
Mutual Assent................................................................................................................................20
Consideration.................................................................................................................................20
Key concept of Consideration/Overview ..................................................................................20
Case: Batsakis v. Demotsis....................................................................................................21
Case: Plowman v. Indian Refining Co...................................................................................22

Bargained-for/Exchange............................................................................................................22
Case: Allegany College..........................................................................................................22
Case: Pennsy Supply, Inc. v. American Ash:........................................................................22
Benefit/ Detriment.....................................................................................................................23
Case: Hamer v. Sidway:.........................................................................................................23
Case: Kirksey v. Kirksey.......................................................................................................24
Promises/Gifts............................................................................................................................24
Case: Dougherty v. Salt.........................................................................................................25
Pre-existing Duties.....................................................................................................................25
Promissory Estoppel .....................................................................................................................26
Promises to make a gift..............................................................................................................27
Case: Greiner v. Greiner........................................................................................................27
Charitable subscriptions.............................................................................................................27
Case: King v. Trustees of Boston University.........................................................................27
Gratuitous bailments and agencies.............................................................................................28
Offers by Sub-contractors .........................................................................................................28
Case: Drennan v. Star Paving................................................................................................28
Promises of Employment...........................................................................................................29
Negotiations in Good Faith........................................................................................................29
Case: Pop’s Cones v. Resorts International...........................................................................29
Promissory Estoppel & Remedies.............................................................................................29
Promissory Restitution...................................................................................................................30
Case: Credit Bureau Enterprises, Inc. v. Pelo........................................................................30
Electronic Contracting...................................................................................................................31
Case: ProCD, Inc. v. Zeidenberg...........................................................................................32
Statute of Frauds............................................................................................................................32
Case: Crabtree v. Elizabeth Arden.........................................................................................33
Case: Alaska Democratic Party v. Rice.................................................................................35
Contracts for Marriage Consideration.......................................................................................36
Contracts that cannot be performed under one year..................................................................36
Contracts for Land.....................................................................................................................36
Case: Winternitz v. Summit Hills J.V....................................................................................37
Executory-Administrator Agreements.......................................................................................37
Guaranty Agreements................................................................................................................38
Surety Agreements.....................................................................................................................38
Statute of Frauds under the UCC...............................................................................................38
Case: Buffaloe v. Hart............................................................................................................39
CISG..........................................................................................................................................39
Principles of Interpretation............................................................................................................39
Case: Frigaliment Importing Co. v. B.N.S. International Sales Corp....................................41
Parol Evidence Rule.......................................................................................................................42
Six Exceptions to the Parol Evidence Rule................................................................................44
UCC Approach to the Parol Evidence Rule...............................................................................44
Case: Nanakuli Paving & Rock Co., v. Shell Oil Co.............................................................45
CISG Approach to the Parol Evidence Rule..............................................................................46
Supplementation of the Agreement: Implied Terms......................................................................46
Case: Wood v. Lucy, Lady Duff-Gordon..............................................................................47
Case: Leibel v. Raynor Manufacturing Co............................................................................47
Implied Obligation of Good Faith..............................................................................................48
Commercial Deals v. Deals involving an Aesthetic Matter.......................................................48
Implied Warranties.....................................................................................................................48
Contract Avoidance.......................................................................................................................49
Infancy Defense.........................................................................................................................50
Case: Dodson v. Shrader........................................................................................................50
Mental Incapacity Defense........................................................................................................51
Duress and Undue Influence......................................................................................................52
Fraud/Misrepresentation............................................................................................................53
Case: Syester v. Banta............................................................................................................53
Case: Hill v. Jones..................................................................................................................54
Unconscionability/Adhesion Contracts.....................................................................................55
Case: Higgins v. Superior Court of Los Angeles County......................................................56
Policy.............................................................................................................................................57
Case: Valley Medical Specialists v. Farber...........................................................................58
Sources of Contract Law
• Statutory law
o UCC (Uniform Commercial Code)
 If a merchant, then a promise is binding under the UCC
 The UCC does not cover transactions involving real estate, insurance, and
personal services
 Article 2 of the UCC applies to transactions regarding the sale of goods,
regardless of whether the buyer or seller or neither or merchants
• However, there are some sections and portions of sections that are
applicable only if both parties are merchants and or only if one
party has merchant status
o i.e.: 2-207(2) (Battle of the forms)
• Art. 2 has been accepted by every state except Louisiana
• Art. 2 applies to the sale of goods, but is not limited to transactions
involving merchants
• Common law
o Judicial Opinions (judge made)
o Precedents (Stare Decisis)
 The decision stands
o Persuasive Authority
 Non-binding
• Cases from sister courts
• Authorities
• Restatements
o “Black letter law”
 “The Restatement resembled a statute in form, consisting of ‘black
letter’ statements of the ‘general rule (or, where the cases
appeared to conflict, the better rule)” (see page 9 in casebook)
 Considered a secondary source, however, courts have justified
decisions by citing and quoting the Restatements’ rule on a given
topic or point
• Legal Commentary
• International Commercial Law
o CISG
 Analogous to the UCC
 Applies to the sale of goods
 Applies to businesses/merchants only
Objective vs. Subjective Theories of Contract
Objective Theory (see page 23 of casebook)

•Looks at the conduct of the parties from the perspective of a reasonable person
rather than the actual, subjective intentions of the parties
• Doesn’t matter what the promisor was thinking, only what the promisor DID
o Restatement (Second) of Contracts § 21:
 Neither real nor apparent intention that a promise be legally binding
is essential to the formation of a contract
Case: Ray v. William G. Eurice Bros., Inc.
 π entered into a contract with the ∆’s for the construction of a
house.
 ∆ submitted its own specifications for the house for the approval but
the π had their own set of specifications.
 π’s specifications were integrated into the final contract that was
signed by all parties.
 ∆ then refused to build the house according to π’s specifications.
 The court held that ∆ breached the contract and that there was no
fraud or duress in the making of the contract and any mistake
regarding which specifications were part of the contract was
unilateral on the part of the ∆.
 π's intended that their specifications were to be used and this was
clearly stated in the contract that integrated those specifications.
The builder signed the contract and was bound by its contents.
 The actual intent of the ∆ was immaterial because it had agreed in
writing to a clearly expressed intent to the contrary.
• Doesn’t matter what you meant or if you read it, all that matters is whether it
reasonably appears to an outside observer that you DID make a commitment
• The reasonable aspect of the objective theory also serves to protect the
promisee:
o i.e.: If the promisee knows that an offer is a joke and a reasonable person
can tell that the offer was a joke, then there is probably no contract
Case: Leonard v. PepsiCo.
• The π tried to purchase a plane with “Pepsi points”
• Did Leonard honestly believe that he could buy a plane with
Pepsi points?
• Even if he did, is that reasonable?
Case: Lucy v. Zehmer
• Over friendly drinks at a bar, Lucy offered to buy a farm for
50K
• ∆ thought it was a joke and “played along” and even signed
an agreement that was jotted down on a scrap piece of
paper
• Court: “must look at the outward expression of a person as
manifesting his intentions”
• ∆ didn’t lack capacity because he remembered key facts
o He couldn’t have been too intoxicated to enter into the
agreement because he remembers relevant facts of
the night
Subjective Theory (see page 23 of casebook)
• Looks at the actual intention of a party, rather than the party’s conduct and
determines the party’s legal obligations
• Was there a “meeting of the minds?”
o Meeting of the minds requires actual assent by both parties to the
formation of a contract, meaning that they agree on the same terms,
conditions, and subject matter
 Modern contract doctrine requires only objective manifestations of
assent
 The court in Ray v. Eurice Bros. mentioned that there was no
“meeting of the minds;” however, the court still took an objective
approach to deciding the case by looking at the conduct of the
parties and not the actual intention
What is a contract/ Contract formation
• Contracts are a common understanding as to something that is to be done in the

future by one or both parties
• A promise or set of promises that are enforced by the government
• Refers to an agreement that has legal effect; meaning, it creates obligations for
which some sort of legal enforcement will be available if performance is not
forthcoming as promised
• The Restatements (Second) of Contracts § 1 define contracts as: “a promise or
set of promises for the breach of which the law gives a remedy, or the
performance of which the law in some way recognizes as a duty
• The UCC(§ 1-201 (19)) defines a contract as “the total legal obligation which
results from the parties’ agreement as affected by this Act and any other
applicable rules of law”
Elements in a Transaction
• Three elements in a transaction, each of which may be called a “contract”
o Agreement-in-fact between the parties
o Agreement as written (which may or may not correspond accurately to the
agreement-in-fact), and
o The set of rights and duties created in the first two
When is a contract formed?

• To have a contract formed and enforced
o Promises must be exchanged
o Promises are not merely gratuitous (so there must be consideration)
o There must be a commitment by the promisor to be (presently) bound, that
is accepted by the promisee
• What is needed?
o Offer
o Acceptance Mutual Assent (see page ____ of outline)
o Consideration (see page ____ of outline)
• Under UCC § 2-206 (Offer and Acceptance in Formation of Contract):
o (1) Unless otherwise unambiguously indicated by the language or
circumstances
 (a) an offer to make a contract shall be construed as inviting
acceptance in any manner and by any medium reasonable in the
circumstances:
 (b) an order or other offer to buy goods 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 or nonconforming goods, but the shipment of
nonconforming goods is not an acceptance if the seller seasonably
notifies the buyer that the shipment is offered only as an
accommodation to the buyer
o (2) Where the beginning of a requested performance is a reasonable
mode of acceptance an offeror who is not notified of acceptance within a
reasonable time may treat the offer as having lapsed before acceptance
Agreements to Agree
• Problems with agreements to agree:
o There has to be a present desire to be bound, so there cannot be an
agreement to agree to do something in the future
o There is no contract if there are too many missing vital terms
 i.e.: “I will sell you my car!” “I accept!”
• Is this a contract? What is the price? What is the timing?
• Professor Corbin on “Agreements to Agree:”
o As long as the parties know that there is an essentially term not yet
agreed on; there is no contract…
o If the document or contract that the parties agree to make is to contain any
material term that is not already agreed on, no contract has yet been
made;
o And the so-called contract to make a contract is not a contract at all
• Restatement (Second) of Contracts § 26
o A manifestation of willingness to enter into a bargain is not an offer if the
person to whom it is addressed knows or has reason to know that the
person making it does not intend to conclude a bargain until he has made
a further manifestation of assent
• Although two parties cannot agree to make an agreement in the future, there are
parts of an agreement that can be settled at a later time:
o Formal Contract Contemplated
 Restatement (Second) of Contracts § 27
• Manifestations of assent that are in themselves sufficient to
conclude a contract will not be prevented from so operating
by the fact that the parties also manifest an intention to

prepare and adopt a written memorial thereof; but the
circumstances may show that the agreements are
preliminary negotiations
o If the terms are agreed upon and the written contract
is just a formality, then there may be a contract
Case: Quake Construction v. American Airlines
• ∆ and the general contractor hired π to do certain work on a
construction project
• A dispute arose and π filed an action for breach of contract
• The ∆ and the general contractor claimed that no contract
had been entered
• The π based his cause of action on a letter of intent between
the parties
• On appeal the court held that although letters of intent were
enforceable, such letters were not necessarily enforceable
unless the parties intended them to be contractually binding.
• The court found that the letter of intent was ambiguous
regarding the parties' intent to be bound
• The court reasoned that although the letter of intent included
detailed terms of the agreement, the letter also referred
several times to the execution of a formal agreement, thus
indicating that the intent was not to be bound by the letter.
Therefore, the court concluded that on remand the circuit
court should allow the parties to present parol evidence
regarding intent
Case: Walker v. Keith
• The principal issue was whether the option provision in the
lease fixed the rent with sufficient certainty to constitute an
enforceable contract between the parties.
• The court found that the basic principle of contract law that
required substantial certainty as to the material terms upon
which the minds of the parties had met was a sound one and
was to be adhered to.
• A renewal option stood on the same footing as any other
contract right.
• Rent was a material term of a lease.
• The court held that if the parties did not fix it with reasonable
certainty, it was not the business of courts to do so.
• The renewal provision of the parties' contract was fatally
defective in failing to specify either an agreed rental or an
agreed method by which it could be fixed with certainty.
• Because of the lack of agreement, the lessee's option right
was illusory, and the chancellor erred in undertaking to
enforce it.
•
If the parties had agreed upon a specific method of making
the determination of the rent amount, such as by
computation, the application of a formula, or the decision of
an arbitrator, they could have been said to have agreed
upon whatever rent figure emerged from utilization of the
method.
o Open Price Term
 UCC § 2-305(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:
o (a) nothing is said as to price; or
o (b) the price is left to be agreed by the parties and
they fail to agree; or
o (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 set or recorded
• It still has to be determined whether or not the parties had a
present intention to be bound
Types of Contracts
• Unilateral
o Promise for performance
 Performance = Acceptance = Contract
o Example: My performance is the price for your promise
o The only way to accept in a unilateral contract is to perform the act
required by the offer
o There is no contract until performance is completed
 However, the offeror cannot revoke the offer once performance has
begun:
• Restatement (Second) of Contract s § 45
o (1) 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
o (2) The offeror’s duty of performance under any
option contract so created a conditional on completion
or tender of the invited performance in accordance
with the terms of the offer
o Restatement (Second) of Contracts § 32
 In case of doubt an offer is interpreted as inviting the offeree to
accept either by promising to perform what the offer requests or by
rendering the performance, as the offeree chooses
• Bilateral
o The notion of “contract” typically involves an element of futurity:

commitment to some course of action to be undertaken in the future
o Bilateral contracts contain an exchange of promises
o “First the parties engage in a period of preliminary negotiations,
exchanging communications of a more or less detailed nature about the
type of exchange of performances to which each would be willing to
agree. Next, one party (the “offeror”) makes an offer – a direct, complete
proposal that a contract be entered into, providing for an exchange of
defined performances. This has the effect of creating in the party to which
that offer is addressed a “power of acceptance.” If that other party (the
“offeree” – manifests her “acceptance” of the offer in a legally effective
way, than at that moment a contract comes into being” (see page 34 in
casebook)
o Examples:
 A promises B (I promise to perform terms, if you promise to ___)
 B promises A (I promise to ____)
 My promise
• Option
o Typically, the offeror can revoke an offer at any time; however, an option
contract will limit the offeror’s power to revoke
o The traditional common-law view is that an option contract can be formed
only if the offeree gives the offeror consideration for the offer (see page 54
of Crunchtime)
 (1) An offer is binding as an option contract if it
• (a) is in writing and signed by the offeror, recites a purported
consideration for the making of the offer, and proposes an
exchange on fair terms within a reasonable time; or
• (b) is made irrevocable by statute
 (2) 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
o Cannot say “I promise not to revoke before Friday” because legally the
offeror can revoke anytime before acceptance
 However, an option contract allows for this: “If you pay me $10
now, I promise not to revoke”
• An option contract is a promise which meets the
requirements for the formation of a contract and limits the
promisor’s power to revoke an offer
o The modern approach is that a signed option contract
that recites the payment of consideration will be
irrevocable, even if the consideration was never paid
(see page 55 of Crunchtime)

o UCC § 2-205 (Firm offer)
 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 such term of
assurance on a form supplied by the offeree must be separately
signed by the offeror
o If the firm offer is on a form drafted by the offeree, it is
irrevocable only if the particular “firm offer” clause is
separately signed by the offeror (see page 55 of
Crunchtime)
Offer/ Acceptance
What is an offer?
• The Restatement (Second) of Contracts § 24 defines an offer as:
o “[T]he manifestation of willingness to enter into a bargain, so made as to
justify another person in understanding that his assent to that bargain is
invited and will conclude it”
• The UCC:
o Does not define offer, so court’s must look to the common law when
dealing with contracts made for the sale of goods
• The CISG (Convention on Contracts for the International Sale of Goods):
o Art. 14
 (1) “A proposal for concluding a contract addressed to one or more
specific persons constitutes an offer if it is sufficiently definite and
indicates the intention of the offeror to be bound in case of
acceptance. A proposal is sufficiently definite if it indicates the
goods and expressly or implicitly fixes or makes provision for
determining the quantity and the price”
 (2) “A proposal other than one addressed to one or more specific
persons is to be considered merely as an invitation to make offers,
unless the contrary is clearly indicated by the person making the
proposal”
o Art. 15
 (1) An offer becomes effective when it reaches the offeree.
 (2) An offer, even if it is irrevocable, may be withdrawn if the
withdrawal reaches the offeree before or at the same time as the
offer
• The Promisor communicates a proposal
o In a way reasonably/objectively manifesting a willingness to be bound
o Consider both content and context to see what is reasonable
• The offeror is the “master of his offer”

o Can prescribe substantive terms of the deal he’ll agree to
o Can prescribe the precise manner of acceptance
 See UCC § 2-206
o Can prescribe terms whereby offer will automatically terminate
• An offer must have specific terms (see Certain Definite Terms/Specific Terms in
outline)
• Arthur Corbin’s definition on Contracts:
o “An offer is an expression by one party of assent to certain definite terms
provided that the other party involved in the bargaining transaction will
likewise express assent to the same terms”
• The offeror is the “master of his offer”
o Offeror sets (prescribe) the terms of the offer
o The offeror can determine (prescribe) the precise method of acceptance
• Once the offer is accepted, there is a contract
• No further assent is needed by the promisor
How is commitment of promisor shown?
• Words
• Writing
• Inference from an act
Certain Definite Terms/Specific terms
• Need essential terms to have true mutual assent
• 7 “Required” contract terms:
o Subject matter
o Price
o Payment Terms
o Quality
o Quantity
 Essential under the UCC
• UCC § 2-204(3): “Even though one or more terms are left
open a contract for sale does not fail for indefiniteness if the
parties have intended to make a contract and there is a
reasonably certain basis for giving an appropriate remedy”
 It is okay to say
• “As many as you can make”
• However, you may not be able to point to a number of items
o Work to be done
o Duration
• Courts will imply terms that are not in a contract or are not clear (see page ___ of
outline)
Why wouldn’t an offer still be on the table?
• Offeror incapacity or death
• Too much time has passed:

o Stated expiration of time
o Implied expiration of time
o Reasonable expiration of time
o UCC § 2-206 (2):
 “Where the beginning of a requested performance is a reasonable
mode of acceptance an offeror who is not notified of acceptance
within a reasonable time may treat the offer as having lapsed
before acceptance”
o UCC § 2-205:
 When looking at firm offers, “in no event may such period of
irrevocability exceed three months”
• Offeror has revoked the offer (see Revocation of an Offer in outline)
o Words or actions plus offeree knowledge
Mailbox Rule
• The offeree’s acceptance is valid as of mailing
• The offeror’s revocation is valid when received
o Because acceptance is valid as of mailing, if the revocation is received
after the offeree has mailed the acceptance, there is still a valid contract
o If the revocation is received before the acceptance can be mailed, then
there is no contract
Case: Lonergan v. Scolnick
 ∆ posted an ad in a paper selling property in California (∆ was in
NY)
 π responds ∆’s ad inquiring about the property
 ∆ responds to π
 π responds asking ∆ more questions and proposing certain escrow
agent
 ∆ responds by saying that proposed bank is OK and states “you
must decide quickly if you want it”
 ∆ sells property to someone else
 π sends a letter saying he wants to buy and will set up escrow
o Although, π mailed his acceptance before he received the revocation, the
court decided that ∆ had not shown a willingness to be bound, therefore
his letter stating that “you must decide quickly if you want it” was not an
offer
o Same principles apply to e-mail
Counteroffers
• Restatement (Second) of Contracts § 59 states:
o A reply to an offer which purports to accept it but is conditional on the
offeror’s assent to terms additional to or different from those offered is not
an acceptance but is a counteroffer.
• Restatement (Second) of Contracts § 39(2) states:
o An offeree’s power of acceptance is terminated by his making of a

counteroffer, unless the offeror has manifested a contrary intention or
unless the counteroffer manifests a contrary intention of the offeree.
• Under the UCC, one’s acceptance can alter the offer and not be considered a
counteroffer (see page ___ of the outline)
Revocation of an Offer/Termination of the Power of Acceptance

o (1) An offeree’s 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
o (2) In addition, an offeree’s power of acceptance is terminated by the non-
occurrence of any condition of acceptance under the terms of the offer
• Words or act of revocation plus offeree’s knowledge is necessary
• An offeror can revoke an offer at any time before the offer has been accepted
• Offeror does not have to tell the offeree directly, someone else can tell the
offeree or the offeree can be in a situation and hear about the revocation of the
offer
Case: Normile v. Miller
 π was interested in purchasing a home from ∆
 π made an offer in writing to ∆ to purchase
• Offer says it must be accepted by “5 pm Aug. 5th”
 ∆ makes a counteroffer (marks up important provisions of offer and
sends it back)
 π does nothing and sits on the offer
 3rd party buyer offers to buy from ∆, and ∆ agrees
 Broker tells π that ∆ sold the home (“you snooze you lose”)
• An offeror cannot “promise not to revoke” before a set time frame
o i.e.: “I promise I won’t revoke the offer before Tuesday”
 No consideration – gratuitous promise
 Legally, you can revoke before that time
 There is nothing binding in that statement
o However, if you said “If you give me $10, I won’t revoke before Tuesday”
 This agreement has consideration, IF the $10 is paid
 This would be considered binding
 This is an option contract (see page ___ of outline)
 Putting down money towards an offer limits the offeror’s power to
revoke
• CISG Art. 15:
o (2) An offer, even if it is irrevocable, may be withdrawn if the withdrawal
reaches the offeree before or at the same time as the offer
• Performance on a unilateral contract renders the offer temporarily irrevocable

(see page ___ of outline)
• If the offer for a bilateral contract, the offeree’s making of preparation will cause
the offer to be temporarily irrevocable if justice requires (see page 56 of
Crunchtime and Restatement (Second) of Contracts § 87(2))
Acceptance
• Typically, the offeree can only accept how the offeror wants acceptance
• Assent can be by words or actions
• Typically silence is not assent
o Exceptions are listed in Restatement (Second) of Contracts § 69 (1)
 “Where an offeree fails to reply to an offer, his silence and inaction
operate as an acceptance in the following cases only:
• (a) 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
• (b) Where 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) Where because of previous dealings or otherwise, it is
reasonable that the offeree should notify the offeror if he
does not intend to accept”
• Restatement (Second) of Contracts § 58 (Mirror image rule)
o An acceptance must comply with the requirements of the offer as to the
promise to be made or the performance to be rendered
o The mirror image rule is under common law
 If the acceptance conflicts with the terms of the offer or adds new
terms, the purported acceptance is a rejection and considered a
counteroffer and not an acceptance (see page ___ of outline)
• The UCC rejects the “mirror image rule” under the view on battle of the forms and
will lead to a contract being formed even though the acceptance diverges from
the offer. (see page 50 of Crunchtime)
• UCC 2-207(1)
o Acceptance can be written to an oral offer
• CISG Art. 19
o Mirror image “soft”
Battle of the Forms
• Businesses love forms because they:

o Save money
o Save time
o Control risk
• Under the objective theory, it does not matter if the party did not read the form
• Ambiguities in forms are usually construed against the drafter
• Under common law, when the offeree submits a form as acceptance to an offer
and that form has terms different or additional to the original offer, then this form
is considered a counteroffer because it does not conform to the mirror image rule
o (1) A counteroffer 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 the original offer
o (2) An offeree’s power of acceptance is terminated by his making of a
counteroffer, unless the offeror has manifested a contrary intention or
unless the counter offer manifests a contrary intention of the offeree
• Also, under common law, the party that gets their form in last, controls and this is
known as the Last Shot Rule
Case: Princess Cruises, Inc. v. General Electric Co.
 A company and shipowner entered into a maritime contract for the
inspection and repair services of the ship owner's cruise ship
 A jury found the company liable for breach of contract and awarded
the shipowner damages
 The court held that when the predominant purpose of a contract
was the rendering of services, the Uniform Commercial Code was
inapplicable, and courts had to draw on common law doctrines
when interpreting the contract. As a matter of law, services rather
than goods predominated the parties' contract
 The company's final price quotation was a counteroffer rejecting the
ship owner’s purchase order, and the terms and conditions of the
price quotation controlled liability and damages in the transaction
• However, drafters of the UCC were dissatisfied with this rule so under § 2-207,
the “last shot rule” is removed:
o UCC § 2-207 (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
• This rule is intended to overturn the “mirror image” and
“last shot” rules by providing that purported acceptance
would be treated as acceptance, even if it contained
additional or different terms (see handout on § 2-207)
• § 2-207 (1) does not discuss offer, so it assumes one
has been made – look to common law to determine
whether or not an offer has been made
• Under this section, once the offeree assents through a
definite and seasonable expression of acceptance or a
written confirmation then a contract is formed even if

there are additional or different terms
o This differs from common law, where the
additional or different terms would be considered
a counteroffer
• If the acceptance is not an expression of acceptance or
if there is clear and explicit language making the
acceptance conditional, then under § 2-207(1), there is
no contract
o If the acceptance is not an expression of
acceptance and clearly conditional, then this
would be considered a counteroffer
o Review handout for discussion on how courts handle
a counteroffer under the UCC
• Under § 2-207, a written confirmation is acceptable for
an oral agreement
o The terms of the confirmation become a part of
the contract if they reflect the oral agreement
o Look to § 2-207(2) if the written confirmation
contains additional or different terms
o Once an oral agreement is made, it is not possible
to have a conditional acceptance
o UCC § 2-207 (2)
 The 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
o Assuming a contract is formed under § 2-207(1),
look to § 2-207(2) to see if additional or different
terms become a part of the agreement
o In order for § 2-207(2) to apply, both parties must
be merchants
 If both parties are merchants, than the
additional terms do become a part of the
agreement, unless § 2-207(2)(a)(b) or (c)
applies
 If both parties are not merchants, than the
additional terms do not become a part of
the agreement
o Additional terms are terms that add to the terms
of the offer or oral agreement

o Different terms are terms that contradict or qualify
an express term of the offer (or contradicts a
terms of the oral agreement in case of a
confirmation)
o UCC § 2-207(2)(a)
 If the offer contained express language
limiting acceptance to the terms of the
offer, the additional terms would not
become a part of the agreement
• i.e.: “This order is conditioned on
seller’s acceptance of the terms
hereof. Any additional or different
terms contained in seller’s
acknowledgement are expressly
objected to and shall not be deemed
to be a part of the contract between
the parties”
 Basically…the acceptance can’t
o UCC § 2-207(2)(b)
 Unless the terms would materially alter the
agreement, the additional terms would be
allowed
• To determine whether or not the
terms would materially alter, look to
the surprise and hardship tests
o If the additional terms are not
something that a party would
expect (i.e.: not a part of
industry standards) then those
terms would be considered
material
o If the additional terms would
pose a hardship on a party
(i.e.: ) then those terms
would be considered material
• Other examples of clauses that would
be pose a material change, include:
o Clauses negating standard
warranties as that of
merchantability of fitness for a
particular purpose (see Official
Comment 4 of the UCC)
o A clause reserving to the seller
the power to cancel upon the
buyer’s failure to meet any

invoice when due (see Official
Comment 4 of the UCC)
o A clause requiring that
complaints be made in a time
materially shorter than
customary or reasonable (see
Official Comment 4 of the UCC)
o UCC § 2-207(c)
 If the offeror gives notification of objection
to the additional terms, either before or
after receiving the acceptance, then they do
not come in
o UCC § 2-207 (3)
 Conduct by both parties which recognizes the existence of a
contract is sufficient to establish a contract for sale although the
writings of the parties do not otherwise establish a contract. In
such case the terms of the particular contract consist of those terms
on which the writings of the parties agree, together with any
supplementary terms incorporated under any other provisions of
this Act
• This section is designed to deal with cases in which
examination of the documents indicates that a contract
was formed because the offer and acceptance
contradict each other, but the parties nonetheless have
acted as if a contract has come into existence (see
handout § 2-207)
• Its terms consist of those on which the documents
agree, plus other implied-in-law terms, such as the
Code’s provisions on implied warranties and remedies
o Trade usage, course of dealing, and course of
performance would also be part of the contract
under § 2-207(3) (see handout § 2-207)
• Mutual Assent can be determined by conduct
Case: Harlow v. Jones
o The court found that an oral sales contract was
reached before the parties began exchanging
forms that were never signed
o Under UCC § 2-204(3), the court found that the
fact that shipping and delivery terms were not
completely settled during oral negotiations was
unimportant
o The court treated the written forms sent by the
parties as confirmatory memoranda, which
included the same shipment date of September to
October and, more importantly, specified a
"C.I.F." shipping term

o Under UCC § 2-320(2), the C.I.F. contract was not
a destination but a shipment contract, which was,
thus, governed by UCC § 2-504
o The court found that only a material delay would
justify the buyer's rejection. Noting that under a
recognized trade usage, a shipment term of
September to October implied delivery by October
to November, the court held that any delay in
shipment was cured by a timely delivery of
November 29
o Finding that the buyer's repudiation in October
was premature and that the buyer instead should
have demanded adequate assurances from the
seller, the court held that the buyer breached the
contract and awarded the seller the difference
between the resale and the contract price.
• This section applies when the forms have different
terms
o Cancels out “the knock out” rule because the
courts will look to the conduct of the parties to
determine the terms of the agreement
Mutual Assent
o Offer + Acceptance = Mutual Assent

o Under the subjective theory of contracts, mutual assent is shown through a
meeting of the minds
o Under the objective theory of contracts, mutual assent is shown through conduct
Consideration
Key concept of Consideration/Overview

• Too many promises to be enforced so every promise and agreement will not be
enforced, unless there is “consideration”
• What has motivated the parties to contract?
• When looking for consideration, it must be determined if there was something
bargained-for and exchanged or whether a party received a benefit or suffered a
detriment:
o Bargained-for/Exchange
 Restatement (Second) of Contracts § 71:
• (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
o an act other than a promise, or
o a forbearance, or
o 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.
o Benefit/Detriment
 Restatement (Second) of Contract § 79:
• If the requirement of consideration is met, there is no
additional requirement of (a) a gain, advantage, or benefit to
the promisor or a loss, disadvantage, or detriment to the
promisee…
o This particular definition implies that there is no
benefit/detriment needed in the initial definition of
consideration; however this definition would arrive at
the same conclusion because the benefit/detriment
induced the act (meaning the benefit/detriment was a
part of the bargain and therefore the consideration for
the agreement)
 Common law focuses on the “quo”
 Restatements focuses on the “pro”
• The requirement of consideration renders two main types of transactions
unenforceable (see page 59 of Crunchtime)
o Promises to make gifts
o Business situations in which one party has not really promised to do
something or given anything up, even though he may appear to have done
so (the “detriment” element is missing here)
• Even if an agreement on its face appears to have consideration, courts will
examine whether or not the consideration is nominal or a sham
• One cannot argue inadequacy of consideration, which is:
o Consideration that is not fair or reasonable under the circumstances of the
agreement
Case: Batsakis v. Demotsis
 ∆ borrowed 500,000 Drachmae from π
• The amount converted to $25.00 USD
 ∆ signed a note, promising to re-pay π $2,000 USD plus 8%
interest
 Although the ∆ argued that the amount owed was not the amount
loaned, the court held that inadequate consideration was not
enough to void the contract

• ∆ wanted the Drachmae bad enough that she was willing to
sign a note pledging to re-pay an amount significantly larger
than the amount she received and her willingness to sign
was enough consideration to make the contract enforceable
• One cannot argue for past consideration
o Promises made in return for a detriment previously suffered are not
enforced
Case: Plowman v. Indian Refining Co.
 πs had worked many years for the ∆s and when the ∆s let them go,
the ∆s made separate contracts to pay each of the individual πs
once a month an amount equal to ½ of the wages formerly earned
for the rest of πs lives
 πs argue that part of the consideration to enter into the contracts
arose out of the relationship the existing (see page 99 in casebook)
 The court held that “appreciation of past services or pleasure
afforded the employer thereby is not a sufficient consideration” (see
page 103 in casebook)
Bargained-for/Exchange
• Why bargained-for exchanges?
o Economic reasons
 Exchanges of value (quid pro quo) increase society’s economic
efficiency
• Under the bargained-for/exchange element, the promise induces the
performance
o The promise is given as part of a “bargain”; that is, the promisor makes his
promise in exchange for the promisee’s giving of value (see page 59 of
Crunchtime)
o The promise to make a gift is generally unenforceable, because it lacks
the bargain element of consideration. (see page 60 of Crunchtime)
Case: Allegany College
o ∆ promises college $5K stating that the amount “shall be known as the
Mary Yates Johnson memorial fund” and pays $1K towards the fund
o ∆ later changes her mind and does not pay the remaining $4K
o After her death the school sues to enforce the gift
o J. Cardozo felt that because the school bound itself to perpetuate the
name of the founder when it accepted the first $1K, the “gift” was really a
contract
o Therefore the exchange was the memorial fund named after Ms. Johnson
for the $5K given to the school
Case: Pennsy Supply, Inc. v. American Ash:
o This case would fall under the UCC because it was for a sale of goods
o Northern York County School District contracted Lobar, who then
subcontracted Pennsy Supply, Inc. to handle the pavement work on a
construction project
• Restatement (Second of Contracts) § 81:
o (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
o (2) The fact that a promise does not itself induce a performance or return
promise does not prevent the performance or return promise from being
consideration for the promise
• Restatement (Second) of Contracts § 17:
o 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
• The bargained-for/exchange theory of consideration doesn’t actually require the
parties to bargain
o Review of Pennsy Supply Inc. v. American Ash Recycling Corp.
 Parties never really bargained; however the court found that
American Ash not having to dispose of the waste was
 Court didn’t care that this was never discussed prior to Pennsy
Supply Inc. retrieving the free material
 The court only cared about what motivated the agreement
Benefit/ Detriment
• Under the benefit/ detriment element, for consideration to be present, the
promisor has to receive a benefit or the promisee must suffer a detriment.
o When we say “detriment,” we mean the promisee must do something she
does not have to do or refrain from doing something that she has a (legal)
right to do (see page 61 of Crunchtime)
• The benefit to the promisor or the detriment to the promisee is the consideration
o Those elements are a part of the bargain
o i.e.: “I promise ______ if you give up smoking”
 Giving up smoking is a part of the bargain and a detriment to the
promisee because she is giving up a legal right to smoke
Case: Hamer v. Sidway:
 Uncle publically promised his nephew that if he refrained from
“drinking, using tobacco, swearing and playing cards or billiards for
money” until he was 21 years old, the uncle would pay him $5K
• At the time, the nephew had a legal right to participate in all
of these activities
• (This is an example of a unilateral contract)
 Nephew upheld his end of the agreement and when he turned 21,
he wrote his uncle and asked him to make good on his promise
 Uncle agrees, but dies 2 years later and never makes good on his
promise
 Executor of uncle’s estate rejects the claim of the nephew, claiming
that the contract did not require anything from the uncle and
therefore had no consideration
The court decided that it did not matter that the uncle did not benefit

from the bargain and that the nephew waiving his legal rights was
sufficient consideration
• Therefore the contract was legal and valid
 This case is an example of a non-economic detriment (see page 61
of Crunchtime)
• The situation in Hamer v. Sidway differs from promises that are made with
conditions
o i.e.: “If you come to my office, I will give you a $100”
 In this example the condition is not bargained for. Also there is no
consideration, therefore, this is not an enforceable promise
Case: Kirksey v. Kirksey
 Defendant promised his widowed sister-in-law a place to live with
her children after heard about the death of his brother, “if you will
come down and see me”
 Even though the sister-in-law gave up her home and suffered a
detriment, the detriment was not a part of the bargain, it was just a
condition for her to get the land
 Therefore the court did not enforce the contract because of lack of
consideration
Promises/Gifts
• The law will not enforce all promises, i.e.:
o Social promises
 “I promise I won’t be late for our date”
o Family promises
 “I promise I will clean my room”
o Gratuitous promises
 Gift
 Non-enforceable because the promisor is not seeking performance
• The promisee doesn’t have to do anything and the promisor
isn’t asking for anything
• Only exception is making a gratuitous promise to make good on a prior debt
when that debt is barred by:
o Bankruptcy
o Statute of limitations
 Example:
• Owe a creditor 50K
• Feel bad and send a dollar after statute of limitation is up
• Because you sent a dollar, you are bound to pay the rest
• An illusory promise is not supported by consideration because it is a statement
which appears to be promising something, but which in fact does not commit the
promisor to do anything:
o “Because of our friendship, I am going to sell you these goldfish at a
discounted price”
o Example from page 63 of Crunchtime:
 “I’ll see you as many widgets at $4 apiece, up to 1,000, as you
choose to order in the next 4 weeks.”
o This promise is not supported by consideration, therefore it is not
enforceable
• Donative promises
o These types of promises are often made in highly emotional states and
one reason why donative promises fail to arouse a secure expectation is
that the promisee realizes the promisor may back off when a sober self
returns (see page 89 of casebook)
 “Thank you for finding my lost dog…I will pay you $1000!”
o These types of promises are typically:
 Informal
 Gratuitous
o Donative promises are not enforced because it would be too easy to
convince a jury that a promise was made, despite the lack of either
objective proof or corroborating evidence (see page 89 in casebook)
o An argument against enforcing donative promises is that it would
discourage people from making gifts
• A promise to give a gift is not enforceable for lack of consideration; however,
once a promisor gives a gift, he cannot rescind the gift because of lack of
consideration
• A person cannot mask a gift, by claiming that there is consideration, when in fact
there is not
Case: Dougherty v. Salt
 An aunt visits her 8 year old nephew and is so touched by the
hardship of his life that she writes a promissory note for $3000,
payable at her death or before
 On the note, she writes, “you have always done for me, and I have
signed this note for you. Now, do not lose it. Some day it will be
valuable.” Also, she used a printed form that contained the words
“value received”
 The court found that this was not a contract, but an executory gift
because there was no consideration and said “The promise was
neither offered nor accepted with any other purpose”
 If the aunt really wanted her nephew to have the $3K, there were
other ways for her to give it to him, instead of writing him a
promissory note that had no consideration. She could have:
• Given him the money outright (executed gift)
• Left him the money in her will (testamentary gift)
• Set up a trust fund for him (gift in trust)
Pre-existing Duties
• If a party does or promises to do what he is already legally obligated to do, or he
forbears or promises to forbear from doing something which he is not legally

entitled to do, he has not incurred a “detriment” for purposes of consideration
o This is known as the pre-existing duty rule (see page 62 of Crunchtime)
 This also means that if parties to an existing contract agree to
modify the contract for the sole benefit for one of them, the
modification will usually be unenforceable at common law, for lack
of consideration. Be on the lookout for this scenario especially in
construction cases. (see page 62 of Crunchtime)
• The Second Restatement and most modern courts, follow
this general rule, but they make an exception where the
modification is “fair and equitable in view of circumstances
not anticipated by the parties when the contract was made”
• However, if the party who promises to do what he is already bound to do
assumes the slightest additional duties (or even different duties), his undertaking
of these new duties does constitute the required “detriment” (see page 62 of
Crunchtime)
o UCC § 209(1) does not apply the “pre-existing” rule to contracts for the
sale of goods:
 An agreement modifying a contract within this Article needs no
consideration to be binding
o Restatement (Second) of Contracts § 89:
 A promise modifying a duty under a contract not fully performed on
either side is binding
• (a) if the modification is fair and equitable in view of
circumstances not anticipated by the parties when the
contract was made; or
• (b) to the extent provided by statute; or
• (c) to the extent that justice requires enforcement in view of
material change of position in reliance on the promise
Promissory Estoppel
• Promises which foreseeably induce reliance on the part of the promisee will often
be enforceable without consideration, under the doctrine of promissory estoppel
• Restatement (Second) of Contracts § 90(1):
o A promise which the promisor should reasonably expect to induce action
or forbearance on the part of the promisee or a third person and which
does induce such action or forbearance is binding if injustice can be
avoided only by enforcement of the promise. The remedy granted for
breach may be limited as justice requires
• Detrimental Reliance ≠ Detriment as Consideration because:
o No “bargain for” the detriment
o Not sought by the promisor

• The doctrine of Promissory Estoppel requires that there is:
o A promise
o Foreseeable reliance
o Actual Reliance
o Big injustice if promise is not enforced
• Possible applications of Promissory Estoppel:
o Promises to make a gift
o Charitable subscriptions
o Gratuitous bailments and agencies
o Offers by sub-contractors
o Promises of employment
o Negotiations in good faith
Promises to make a gift

• The P.E. doctrine can be applied to promises to make a gift, when the promisee
relied to his detriment (see page 65 of Crunchtime)
Case: Greiner v. Greiner
 A mother promised to convey land to her son in order to rectify the
fact that he had been disinherited by his father's will
 After the son gives up his land and moves, his mother filed an
action to recover possession of the land
 The court ruled in favor of the son, basing the decision on
promissory estoppel
• Although the son paid nothing for the land, he gave up his
homestead in another county, moved and established
himself and his family on the tract, made some lasting and
valuable improvements upon it, and made other
expenditures, relying on his mother's promise; and he lived
on the land for nearly a year before he was served with
notice to quit.
o Comparing Greiner to Kirksey (see page ___of outline)…
Charitable subscriptions
• A written promise to make a charitable contribution will generally be binding
without consideration, under the promissory estoppel doctrine (see page 65 of
Crunchtime)
• Restatement (Second) of Contract § 90(2)
o A charitable subscription or a marriage settlement is binding under
Subsection (1) without proof that the promise induced action or
forbearance
Case: King v. Trustees of Boston University
o Dr. Martin L. King, Jr. left several papers in the possession of Boston
University and promised that upon his death the University would receive
his papers
o His widow argued that his promise was made without consideration and
that he had made the statement with the intent to act in the future
o The court held that the benefit of having the school preserve his papers
constitute consideration
o The court also held that the deceased had promised to give property for a
charitable purpose, meaning there had been a charitable subscription.
o The court also found that the deceased had established a bailment with
defendant university (providing evidence of donative intent)
Gratuitous bailments and agencies
• A bailment is the lawful possession of someone else’s property with the intention
to make a future gift
• If a person promises to take care of another person’s property (a “gratuitous
bailment”), the promisor may be held liable under promissory estoppel if he does
not perform at all
o Review King v. Trustees of Boston University
 Dr. King transferred his property to the University although the
papers were still in his name
 The court felt that Dr. King’s gratuitous bailment of his papers to the
University also showed his intention to donate the papers to the
University upon his death
Offers by Sub-contractors
• Where a sub-contractor makes a bid to a general contractor, and the general
contractor uses the bid in computing his own master bid on the job, the
promissory estoppel doctrine is often used to make the sub-bid temporarily
irrevocable (see page 66 of Crunchtime)
• Current contractor law:
o GC solicits bids from Subs
o GC uses Sub’s bid in its own bid to owner
o If GC wins GC bound to owner
o If GC wins GC has an implied option to accept Sub’s bid (Sub
can’t revoke) but GC doesn’t have to accept (no contract)
o GC can look around and decide which Sub to contract with
• The argument is that once the general contractor has used the sub-contractor’s
bid, then the GC has accepted the sub-contractor’s offer
o In using the sub-contractor’s bid, the GC made the sub’s offer irrevocable
Case: Drennan v. Star Paving
o The π was a general contractor that solicited bids from sub-contractors to
place in a bid for a contract with a school district
o ∆ submitted a bid and the π used the amount in its bid to the school
district
o However, when the π came by ∆’s office, the ∆ revoked the offer because
the ∆ found that there was a mistake in the bid amount and ∆ could not do
the paving work at that amount
o The court found for the π and held “[a]s between the subcontractor who
made the bid and the general contractor who reasonably relied on it, the
loss resulting from the mistake should fall on the party who caused it” (see
page 115 of casebook)
o The court also held “[w]hen plaintiff used defendant’s offer in computing
his own bid, he bound himself to perform in reliance on defendant’s terms”
(see page 115 of casebook)
• Restatement (Second) of Contracts § 90 (see page ___ of outline)
• J. Traynor’s Implied Option Contract via Promissory Estoppel
o Restatement (Second) of Contracts § 82(2)
Promises of Employment
• If an employer promises an at-will job to an employee, and then revokes the
promise before the employee shows up for work, promissory estoppel may apply
• If the promisee relied to his detriment on the promise of employment and the
promisor revokes the offer of employment, the promisee may be able to recover
under promissory estoppel
Negotiations in Good Faith

• A person who negotiates with another may be found to have a duty to bargain in
good faith; if bad faith is found the court may use promissory estoppel to furnish
a remedy (see page 66 of Crunchtime)
Case: Pop’s Cones v. Resorts International
o A local TCBY franchise enters into negotiations with a hotel to relocate to
its store onto the hotel’s premise
o The franchise did not renew its current lease and lost out on potential
revenue by relying on the hotel’s promise that it would lease space to the
franchise
o The hotel ends up leasing the space to another company
o The court held that the plaintiff’s complaint should not have been
dismissed because the plaintiff relied to its detriment on the promise even
though the parties had yet to enter into an agreement
• Although the Pop’s Cones case is not one where the court found bad faith on
behalf of the promisee, the fact remains that the plaintiff relied on the
negotiations in good faith to its detriment
Promissory Estoppel & Remedies
• Reliance remedies
o Your actual losses (your cost downside)
• Contract remedies
o The benefit of your bargain (your lost upside and cost downside)
Promissory Restitution
•Restatement of Restitution § 116 Elements:

o Provided benefit without other’s knowledge or consent – but still entitled to
restitution if:
 Acted unofficiously and with intent to charge
 Necessary to prevent serious bodily harm
 No reason to know the other would not consent (if competent to
consent)
 It was impossible for consent to be obtained under the
circumstances
• A person who confers a benefit upon another is not entitled to restitution if the
interference in the affairs of another is not justified by the circumstances under
which the interference takes place
• In certain circumstances, however, restitution for services performed will be
required even though the recipient did not request or voluntarily consent to be
receive such services
• Unjust enrichment
o The term “unjust enrichment” is an equitable principle mandating that one
shall not be permitted to unjustly enrich oneself at the expense of another
or to receive property or benefits without making compensation for them
(see page 258 of casebook)
o Restatement of Restitution § 1:
 A person who has been unjustly enriched at the expense of another
is required to make restitution to the other. (see page 255 in
casebook)
• Quantum Meruit
o Recovery for services performed
• Contract Implied-in Law
• Quasi Contract1
o Remedy in a quasi-contractual action was damages (see page 255 in
casebook)
• Unjust Enrichment/ Quantum Meruit/ Contact Implied-in Law/ Quasi Contract all
stand for the same principle
Case: Credit Bureau Enterprises, Inc. v. Pelo
o ∆ was hospitalized after making threats to harm himself
o A magistrate judge found probable cause that he was mentally impaired
and likely to injure himself
o During ∆’s admission to the hospital, he was given a release form to sign
which would have made either the ∆ or his insurance company
responsible for the hospital bill
o ∆ refused to sign the form
1
Although the term implies a relationship to contract law, the modern law of restitution is based on unjust enrichment
and has no particular relationship to contract (see page 254 of casebook)
o According to the ∆, a nurse then demanded that he sign the release form
or the hospital could not insure the safety or return of his personal items
o ∆ finally signed the release, which stated that he understood his liability for
charges not covered by his insurance
o ∆ then refused to pay for the costs associated with his hospitalization
o The hospital assigned its claim against ∆ to the π for collection
o The court found ∆ had benefitted by the hospitalization and therefore π
was entitled to the value of the services rendered and entered judgment in
favor of π
o The court therefore determined that ∆ was legally obligated to pay for
those services based on an implied in law contract theory
Electronic Contracting
• 3 types of electronic transactions:

o Shrinkwrap terms
 An order is placed, either over the phone, online, or at a store
 Once the product is received, it comes with terms that allow for the
purchaser to review the product and typically states that the
purchaser has a window of time to review and return the product if
not satisfied
 If the product is not returned during the window, then the purchaser
is agreeing to keep the product
o Clickwrap terms
 This is typically seen online
 In order for a purchaser to complete a sale, they must scroll
through the seller's terms and then click "I accept"
• Must affirmatively do something to agree
 If the purchaser does not do this, then they cannot complete the
transaction
o Browsewrap terms
 Typically seen on websites
 Website is providing information, not always free
 With these types of terms, the site is requiring that a viewer agree
to the terms before viewing the website
 Fundamentally different from "clickwrap" terms
• Typically with clickwrap terms, the purchaser must scroll
through the terms
• Under the browsewrap terms, the viewer may not be
required to scroll through the terms; however, the terms are
available on the website if the viewer wants to see them
 A little more controversial
• How do you know the terms are there, if you don't see them?
•
Terms you can't see beforehand, yet you are assenting to
them
• License Agreements:
o Not acquiring property, but asking to use the property
o Fastest growing type of agreements
o The contract is the terms of the "permission slip" to use the property
 i.e: music, software, trademarks, franchises
o buy a right to use the name
o Not exactly a purchase
Case: ProCD, Inc. v. Zeidenberg
 Acceptance was keeping the software for 30 days and not returning
it
 Actual contract is not the purchase but shrinkwrap terms were
included and stated that acceptance to the terms would be shown
by keeping the product
Statute of Frauds
• In general, there is no need for agreements to be in writing; however, there are

certain types of agreements that have to be in writing:
o MYLEGS
 Marriage consideration
 Contracts that cannot be performed under one Year
 Contracts for Land
 Executory-Administrator agreements
 Guaranty agreements
 Surety agreements
• General purposes of requiring writings:
o Evidentiary
o Cautionary
o Channeling
• The concept is to avoid risks of fraud
o (1) The following classes of contracts are subject to a statute, commonly
called the Statute of Frauds, forbidding enforcement unless there is a
written memorandum or applicable exception:
 (a) a contract of an executor or administrator to answer for a duty of
his decedent (the executor-administrator provision);
 (b) a contract to 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)
o (2) the following classes of contracts, which were traditionally subject to
the Statute of Frauds, are now governed by Statute of Frauds provisions
of the Uniform Commercial Code
 (a) a contract for the sale of goods for the price of $500 or more
(UCC § 2-201)
 (b) a contract for sale of securities (UCC § 8-319);
 (c) a contract for the sale of personal property not otherwise
covered, to the extent of enforcement by way of action or defense
beyond $5,000 in amount of value of remedy (UCC § 1-206)
o (3) In addition the UCC requires a writing signed by the debtor for an
agreement which creates or provides for a security interest in personal
property or fixtures not in the possession of the secured party
o (4) Statutes in most states provide that no acknowledgement or promise is
sufficient evidence of a new or continuing contract to take a case out of
the operation of a statute of limitations unless made in some writing
signed by the party to be charged, but that the statute does not alter the
effect of any payment of principle or interest
o (5) In many states other classes of contracts are subject to a requirement
of a writing
• What constitutes a writing?
o Promise or some memorandum thereof in writing
o Writing signed by party to be charged (the defendant)
• Remember: Before you can determine whether or not the contract has to be in
writing, you still have to determine if all of the other requirements have been met
(meaning, was there a valid offer, acceptance and consideration)
o If those elements have not been met and there is no contract, there is no
need to look to the Statute of Frauds
• The SOF is an affirmative defense usually raised by the defendant who must
show that the alleged contract is one that falls within the statute
• Plaintiff can still defeat the defendant by showing there is qualifying writing
signed by defendant
o Remember tacking (a grouping of various documents) is allowed
 If docs together include all essential terms
 At least one is signed by defendant
 And any unsigned documents on their face seem to refer to same
transaction
 The memorandum may consist of several writings if one of the
writings is signed and the writings in the circumstances clearly
indicate that they relate to the same transaction
Case: Crabtree v. Elizabeth Arden
• The court affirmed a judgment in favor of plaintiff in a breach
of contract action related to an employment contract.

• The court held that an unsigned office memorandum,
together with two signed payroll cards, were sufficient under
the statute of frauds, to establish an employment contract
with a tenure of two years.
• All three documents referred on their face to the same
transaction and the terms under which plaintiff would be
employed by defendant, and contained all of the essential
terms of the contract between the parties.
• The court therefore held that the length of the contract could
be established through reference to the unsigned office
memorandum without violating the statute of frauds.
• If plaintiff can show a writing, than defendant can attack the integrity of the writing
(common law only):
o If a particular term is not included, can attack the integrity
o In the UCC, you can't attack the integrity of the writing because essential
terms are not necessary; however, you must have quantity included
• If plaintiff can't show a writing
o Does an exception apply?
 Waiver or Affirmation
• If the defendant has done or said things that show that there
was a contract
 Estoppel
• Not promissory estoppel
• Defendant has contributed to the lack of a writing, so then
they can’t use the lack of a writing as a shield
o i.e.: D has promised that they have already signed a
writing
o i.e.: D has promised there will be a contract
o i.e.: D tells P that no contract is necessary
o i.e.: P thinks D is an attorney or would know whether
or not there is a contract
 Full Performance
• If the contract is fully performed, you can't go back and say
that there was no contract
 Partial Performance (for land sale equitable actions)
o (see page ___ of outline)
 Promissory Estoppel
• Instead of recovering under quasi-contract, a plaintiff can try
to get around the requirements of the statute of frauds
through the doctrine of promissory estoppel
• Courts are especially likely to apply promissory estoppel
where the defendant has intentionally and falsely told the
plaintiff that the contract is not within the statute, or that a
writing will subsequently be executed, or that the defense of
the statute will not be used (see page 94 of Crunchtime)

o (1) A promise which the promisor should reasonably
expect to induce action or forbearance on the part of
the promisee or a third person and which does induce
the action or forbearance is enforceable
notwithstanding the Statute of Frauds if injustice can
be avoided only by enforcement of the promise. The
remedy granted for breach is to be limited as justice
requires.
o (2) In determining whether injustice can be avoided
only by enforcement of the promise, the following
circumstances are significant:
 (a) the availability and adequacy of other
remedies, particularly cancellation and
restitution;
 (b) the definite and substantial character of the
action or forbearance in relation to the remedy
sought;
 (c) the extent to which the action or
forbearance corroborates evidence of the
making and terms of the promise, or the
making and terms are otherwise established by
clear and convincing evidence;
• (there is clearly a contract)
 (d) the reasonableness of the action or
forbearance;
 (e) the extent to which the action or
forbearance was foreseeable by the promisor
Case: Alaska Democratic Party v. Rice
 The Democratic Party member claimed that the
Democratic Party official offered her a two-year
position as executive director of the Alaska
Democratic Party.
 When the job failed to materialize, the party
member sued on the alleged oral contract.
 The jury awarded her damages based upon
promissory estoppel and misrepresentation.
 The official and the Democratic Party appealed
the trial court's decision.
 The court affirmed the judgment of the trial
court and adopted the Restatement (Second)
of Contracts §139 as the law of the state.
 The court stated that the party member's
proven § 139 claim had the effect of rendering
the oral contract, which would have been

invalid under the Statute of Frauds, legally
enforceable on the basis of the terms that had
been established by the party member.
Injustice was avoided only by the court's
enforcement of the oral contract of
employment.
 Quasi-contractual recovery
• A plaintiff who has rendered part performance under an oral
agreement falling within the statute of frauds may recover in
quasi-contract for the value of benefits he has conferred
upon the defendant (see page 94 of Crunchtime)
• No writing required
o No mutual assent even required
• Unjust enrichment need to be shown
o Benefit conveyed
o Not paid for
o Unjust to let defendant “get away with it”
• Restitution damages
Contracts for Marriage Consideration
• A promise for which the consideration is marriage or a promise of marriage is
within the Statute of Frauds (see page 88 of Crunchtime)
o i.e.: A tycoon promises to transfer the title to his beach house to his
girlfriend if she agrees to marry him. Under the statute of frauds, this
promise would not be enforceable if it was not written down (and signed
by the party to be charged). Also, neither party could recover if this
agreement was breached under the statute of frauds.
Contracts that cannot be performed under one year
• If there is any way the contract could have been performed (completed) in a year,
then it doesn't have to be in writing
• If a promise contained in a contract is incapable of being fully performed within
one year after making the contract, the contract will have to be in writing (see
page 90 of Crunchtime)
o The one-year period is measured from the time of execution of the
contract, not the time it will take the parties to perform
o The one year provision applies only if complete performance is impossible
within one year after the making of the contract. The fact that
performance within one year is highly unlikely is not enough
o i.e. signing employment contract for next academic year
Contracts for Land

• A promise to transfer or buy any interest in land falls within the statute of frauds
o Very difficult to know who owns land unless it’s in writing
o Can have multiple people who claim to own a parcel of land
•The statute does not apply to the conveyance itself but rather to a contract
providing for the subsequent conveyance of land (see page 89 of Crunchtime)
• The transfer of interest in land applies to most kinds of interests in land including:
o Leases
 Most states have statutes making oral leases enforceable if their
duration is one year or less (see page 89 of Crunchtime)
o Mortgages
• However, contracts to build a building on a parcel of land do not fall under the
statute
• Although an oral contract for the transfer of an interest in land is typically not
enforceable, subsequent acts by either party may make it enforceable (see page
89 of Crunchtime)
o Partial performance
 If the person receiving the land, moves onto the property, builds a
home and makes costly improvements to the land, then a court
may enforce the contract even though it was not in writing
 Payment alone is not sufficient to enforce the contract, there has to
be some showing of performance
o A contract for the transfer of an interest in land may be specifically
enforced notwithstanding failure to comply with the Statute of Frauds 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 charged his position that injustice can be
avoided only by specific enforcement
Case: Winternitz v. Summit Hills J.V.
o A lease of property between a landlord and a tenant was terminated by
the landlord. The tenant brought an action against the landlord alleging
breach of lease and interference with a contract.
o After a verdict in favor of the tenant, the trial court granted a judgment
notwithstanding the verdict in favor of the landlord on all claims. The
tenant sought review, and the court affirmed the judgment on the tenant's
contract claims.
o The court held that the tenant's contract claims were barred by the statute
of frauds.
o The doctrine of part performance was not available to the tenant because
he sought monetary damages, and part performance was an equitable
doctrine.
o The court reversed the judgment on the interference with a contract claim
and reinstated the verdict in favor of the tenant. The court held that the
landlord breached the lease for the purpose of hurting the tenant's sale of
his business.
Executory-Administrator Agreements
Guaranty Agreements
Surety Agreements
• A surety agreement is a promise to pay the debt of another
o This falls under the SOF and unenforceable unless the agreement is in
writing
• Main purpose rule (see page 88 of Crunchtime)
o If the promisor’s chief purpose in making his promise of suretyship is to
further his own interest, his promise does not fall within the statute of
frauds
• A surety differs from a guarantor, who is liable to the creditor only if the debtor
does not meet the duties owed to the creditor; the surety is directly liable. (See
Black’s law dictionary)
Statute of Frauds under the UCC
• UCC § 2-201:
o (1) Except as otherwise provided in this section a contract for the sale of
goods for the price of $500 or more is not enforceable by way of action or
defense unless there is some writing sufficient to indicate that a contract
for sale has been made between the parties and signed by the party
against whom enforcement is sought or by his authorized agent or broker.
A writing is not insufficient because it omits or incorrectly states a term
agreed upon but the contract is not enforceable under this paragraph
beyond the quantity of goods shown in such writing.
o (2) Between merchants if within a reasonable time a writing in confirmation
of the contract and sufficient against the sender is received and the party
receiving it has reason to know its contents, it satisfies the requirements of
subsection (1) against such party unless written notice of objection to its
contents is given within ten days after it is received.
o (3) A contract which does not satisfy the requirements of subsection (1)
but which is valid in other respects is enforceable
 (a) if the goods are to be specially manufactured for the buyer and
are not suitable for sale to others in the ordinary course of the
seller's business and the seller, before notice of repudiation is
received and under circumstances which reasonably indicate that
the goods are for the buyer, has made either a substantial
beginning of their manufacture or commitments for their
procurement; or
 (b) if the party against whom enforcement is sought admits in his
pleading, testimony or otherwise in court that a contract for sale
was made, but the contract is not enforceable under this provision
beyond the quantity of goods admitted; or
 (c) with respect to goods for which payment has been made and
accepted or which have been received and accepted (Section 2-
606)
•What is the required writing under the UCC?

o Any tangible form
o “signature” – any authenticating mark
o Merchant may be bound without signature
• Merchant Confirmation Exception (The Merchants Must Read Their Mail Rule)
o If there is an oral contract confirmed in writing by A, the written
confirmation will be construed as signed by B for statute of frauds
purposes, unless:
 B objects to the writing within 10 days
 It wasn’t sent to the right place
 B didn’t have reason to know the contents of the writing
 It wasn’t sufficient against A for statute of frauds
o Burden is on the recipient to object or give up statute of frauds defense
Case: Buffaloe v. Hart
o The tobacco farmer entered into an oral agreement to purchase five barns
located on the property owners' farm.
o The tobacco farmer already had possession of the barns under a rental
agreement.
o The tobacco farmer gave the property owners a check for partial payment
on the barns, but the property owners returned the check four days later
and informed the tobacco farmer that they had sold the barns to another
buyer.
o A jury found in favor of the tobacco farmer on his breach of contract claim.
o The court affirmed the trial court's denial of the property owners' motions
for directed verdict and for judgment notwithstanding the verdict.
o The court agreed with the property owners that the personal check was
not sufficient to constitute a writing under the statute of frauds, because it
was not endorsed by the property owners.
o The court, however, concluded that there was substantial relevant
evidence that the tobacco farmer "accepted" the purchased barns and that
the property owners "accepted" the tobacco farmer's check, thus taking
the contract out of the statute of frauds.
CISG
• No statute of frauds
• Art. 11:
o A contract for sale need not be concluded in or evidenced by writing and is
not subject to any other requirement as to form. It may be proved by any
means, including witnesses
Principles of Interpretation
• Three theories of contract interpretation:
o Subjective Theory
 Fact finding on what they believe the parties wanted the term would
mean
 Focused on what each party thought in their head
 Focus on private autonomy
 Main case discussed Raffles v. Wichelhaus
• No contract because both parties meant two different things
 This theory was inefficient
• Make enforcing contracts difficult because there was this
long fact finding exercise
• Words do have accepted meanings
o Objective Theory
 Rationale focuses on fairness and efficiency
 Look at what a reasonable person thought it would mean
 Textualist interpretation - "plain meaning"
• Only looks at the text, and nothing else
 Doesn't worry about what was intended, examined the actions
 Doesn't take into account what the parties meant
• Don't want to force parties to contract for something that
neither party wanted
o Modified Objective (Modern) Theory
 Mixture of the subjective and objective theories
 Been adopted by most modern courts
o (1) Where the parties have attached the same meaning to a promise or
agreement or a term thereof, it is interpreted in accordance with that
meaning.
o (2) Where the parties have attached different meanings to a promise or
agreement or a term thereof, it is interpreted in accordance with the
meaning attached by one of them if at the time the agreement was made
 (a) that party did not know of any different meaning attached by the
other, and the other knew the meaning attached by the first party;
or
 (b) that party had no reason to know of any different meaning
attached by the other, and the other had reason to know the
meaning attached by the first party.
 (3) Except as stated in this Section, neither party is bound by the
meaning attached by the other, even though the result may be a
failure of mutual assent
• Under the restatement approach: (Find the Least Cost Avoider)
o If agree, then it is the agreed meaning
o If disagree, then ask: Did any party actually know of the other party's
meaning
 If yes, then the other party's meaning will control
o If no, then ask: Did any party have reason to know of the other party's
meaning?
If yes, then the other party's meaning will control


Sort of a reasonable person (in your position) standard

If no, then ask: Should the absence of agreement on this term

mean no contract?
• 10 Helpful Interpretative Maxims:
o Look at context
o General limited to enumerated specifics
o Specific terms exclude those not listed
o Preference for valid and legal reading
o Construe ambiguities against the drafter
o Interpret contract as unified whole
o Give effect to parties’ purposes
 Look at what was intended
 What were they trying to do here?
o If two provisions conflict, read specific as an exception to the general
o Hierarchy of writings (handwriting, typed, form)
 Handwriting takes precedence over typed docs, which takes
precedence over forms…
o Construe to the public interest
o AND use common sense
Case: Frigaliment Importing Co. v. B.N.S. International Sales Corp.
o Defendant state sales corporation had two contracts with plaintiff foreign
corporation for the sale of "chicken".
o After plaintiff received one shipment of stewing chicken and another was
stopped, plaintiff brought a breach of warranty action, alleging that the
goods sold should have corresponded to the description because the
chicken was not suitable for broiling and frying.
o In dismissing plaintiff's complaint, district court held that plaintiff's reliance
on the fact that the contract forms contained words with a blank not filled
to negate agency was wholly unpersuasive where the clause's purpose
was to permit filling in an intermediary's name to whom commission would
be payable.
o Defendant's subjective intent that it could comply with the contracts by
delivering stewing chicken coincided with objective meaning of "chicken,"
which had at least some usage in the trade; and plaintiff did not sustain its
burden that "chicken" was used in the narrower rather than in the broader
sense.
• Factors to consider for interpretation
o Contract Language (textualist)
o Preliminary Negotiations (purposeful)
 More concerned about what the parties meant to say
 Look at testimony about what the is the intent of the parties
o Legal standards, trade usages, course of performance, etc. (contextual)
o Maxims of Interpretation (constructionist)
10 enumerated maxims

"Tie Breaker" goes to the non-drafter (?)

Common sense

• Reasonable result
o Performance
 Accepting under protest reserves the right..
 P can't say that because they allowed 2nd order to go through after
accepting the first shipment, D knew what it meant because D
accepted under protest
 Cancels out the performance argument
• Judicial Reformation on Contracts
• Equitable action to have court rewrite a written manifestation of a contract
o Because it fails to reflect the true terms of the agreement
o Want the court to enforce the deal, but to enforce the way the contract
should have actually been (the correct way)
 i.e.: typos, descriptions, someone moved a decimal point
o Could be due to error/ mistake
o Parol Evidence Rule not applicable in reformation actions
o To win a suit, you have to show what the actual contract was
o Must show actual contract as different than memorandum
o Must not prejudice the rights of 3rd parties and other
• Doctrine of Reasonable Expectations
o The contract should be read to give effect to the reasonable
expectations of the least advantaged party even if the plain language
reads to the contrary
o The doctrine is limited to:
 Adhesion contracts
 Insurance contracts
 Ambiguous contracts
• Court’s comment f test
o Customers not bound by key terms they could not have reasonably
expected
o If the drafting party knows or has reason to know that the other party
would not accept some contract term, then sneaking it in to the
contract, does not operate to bind the adhering party
o How would you know it wouldn’t accept?
 Bizarre/oppressive
 Eviscerates the non-standard form terms explicitly agreed to
 Eliminates dominate purpose of transaction
Parol Evidence Rule
• When parties to a contract have mutually agreed to incorporate a final version of

their entire agreement into a writing, neither party will be permitted to contradict
or supplement that writing with “extrinsic” evidence or prior agreements or
negotiations between them
• What is needed
o A final version of an agreement and
o It’s in writing
• Purpose behind the parol evidence rule:
o Avoid the “obvious inconvenience and injustice” that would result if
extrinsic evidence was admitted to contradict or vary terms of a written
agreement
• Integrated Agreements
o Completely Integrated
 Parties intend writing to be complete and exclusive statement of the
terms of the agreement
 Restatement (Second) of Contracts § 210(1)
• A completely integrated agreement is an integrated
agreement adopted by the parties as a complete and
exclusive statement of the terms of the agreement.
 For written agreements that are completely integrated, no extrinsic
evidence is allowed to supplement or contradict
o Partially Integrated
 A partial integration is a document that is intended to be final, but
that is not intended to include all details of the parties’ agreement
(intentionally left stuff out)
 Restatement (Second) of Contracts § 210(2)
• A partially integrated agreement is an integrated agreement
other than a completely integrated agreement.
 For written agreements that are partially integrated, the trier of fact
can hear extrinsic evidence; however, only supplementary evidence
can be considered not contradictory evidence
• Merger clauses
o These types of clauses can be included into a written agreement to show
that the parties intend the agreement to be the complete and exclusive
expression of the entire deal
o Some courts find merger clauses conclusive of parties’ intent
o More modern approach is to consider all evidence (including extrinsic
evidence) to determine parties’ intent as to scope of integration
• There are two approaches to the applying the parol evidence rule:
o Classic (Williston)
 This approach looks to the four corners of the document only to
determine if the terms (or a term) is ambiguous
• The judge will not look at any outside documents to
determine whether or not the document is completely
integrated
o Modern (Corbin)
 This approach will look at everything,(including the intent of the

parties) to determine if the terms (or a term) is ambiguous
 The judge will consider all evidence regarding facts and
circumstances of contract to decide if the document is completely
integrated
Six Exceptions to the Parol Evidence Rule
• Evidence to show agreement is void or voidable
o Evidence that shows incapacity, fraud, duress, undue influence, mistake,
etc., will be allowed
• Evidence to show a collateral agreement
o Evidence of separate agreements (separate consideration) or consistent
additional term (that may have reasonably been left out of the writing) will
be allowed
• Evidence of an oral condition precedent to formation
o Evidence of a condition that had to be met will be allowed (parties
intended no legal contract until condition was met)
• Evidence to show entitlement to reformation
o Evidence that the writing does not actually reflect the true “deal” will be
allowed
• Evidence of agreements made after the writing
• Evidence to interpret/explain ambiguity
o Restatement (Second) of Contracts § 214(c)
 Agreements and negotiations prior to or contemporaneous with the
adoption of a writing are admissible in evidence to establish: the
meaning of the writing, whether or not integrated
UCC Approach to the Parol Evidence Rule
• UCC § 2-202 provides the parol evidence rule for contracts regarding the sale of
goods:
o Terms with respect to which the confirmatory memoranda of the parties
agree or which are otherwise set forth in a writing intended by the parties
as a final expression of their agreement with respect to such terms as are
included therein may not be contradicted by evidence of any prior
agreement or of a contemporaneous oral agreement but may be explained
or supplemented
 (a) by course of dealing or usage of trade (Section 1-205) or by
course of performance (Section 2-208); and
 (b) by evidence of consistent additional terms unless the court finds
the writing to have been intended also as a complete and exclusive
statement of the terms of the agreement .
o UCC § 1-205(2) Usage of Trade
 A usage of trade is any practice or method dealing having such
regularity of observance in a place, vocation or trade as to justify an
expectation that it will be observed with respect to the transaction in
question. The existence and scope of such a usage are to proved

as facts. If it is established that such usage is embodied in a
written trade code or similar writing the interpretation of the writing
is for the court
• The usage must exist and must be binding on the party
(members of trade; non members who by their dealings
with members should know of the usage)
o UCC § 2-208 Course of Performance
 (1) Where the contract for sale involves repeated occasions for
performance by either party with knowledge of the nature of the
performance and opportunity for objection to it by the other, any
course of performance accepted or acquiesced in without objection
shall be relevant to determine the meaning of the agreement.
 (2) The express terms of the agreement and any such course of
performance, as well as any course of dealing and usage of trade,
shall be construed whenever reasonable as consistent with each
other; but when such construction is unreasonable, express terms
shall control course of performance and course of performance
shall control both course of dealing and usage of trade (Section 1-
205).
 (3) Subject to the provisions of the next section on modification and
waiver, such course of performance shall be relevant to show a
waiver or modification of any term inconsistent with such course of
performance.
• Should look at how have the parties behaved in the
past?
• Is this behavior consistent with a particular
interpretation/agreement?
• One instance of performance does not equal “course of
performance”
• The UCC approach to the parol evidence rule is a liberal (modern) approach
Case: Nanakuli Paving & Rock Co., v. Shell Oil Co.
o Appellant brought suit claiming a breach of a contract to sell asphalt by the
appellee.
o The jury returned a verdict in favor of the appellant awarding damages.
The trial court set aside the verdict of the jury.
o On review, the court determined that the Uniform Commercial Code in
Hawaii required the court to look at external circumstances in order to
determine the intent of the parties to a contract.
o The court also held that the unique circumstances of the market on Oahu
and in Hawaii in general created a general trade usage of price protection
in the sale of asphalt.
o The court found the trial court did not err in allowing evidence of trade
usage to be admitted into the record, and found sufficient evidence
supported the jury's verdict in favor of the appellant. The judgment of the
trial court was reversed and the jury verdict was reinstated.
• Should evidence of inconsistent trade usage, etc. be excluded?
o (Some courts will say) Option one: ALWAYS Exclude
 If the evidence is inconsistent with express terms, per UCC s. 2-
205 it is barred
o (Other courts will say) Option Two: NEVER Exclude
 UCC's policy of favorable admission of trade usage, course of
dealing and course of performance is a blanket exception to the
parol evidence rule for such matters
o Nanakuli Court's Approach:
 Option Three: SOMETIMES Excluded
• Allow this evidence in unless it totally negates a contract
term
• If you can "read" the term as plausibly "consistent" - then
UCC pro-commercial-practices policy counsels admission of
such practices
• The UCC implies into every contract, a duty to perform the agreement in good
faith
CISG Approach to the Parol Evidence Rule
• No parol evidence rule
• Art. 8(3)
o In determining the intent of a party or the understanding a reasonable
person would have had, due consideration is to be given to all relevant
circumstances of the case including the negotiations, any practices which
the parties have established between themselves, usages and any
subsequent conduct of the parties
Supplementation of the Agreement: Implied Terms
• Implied in fact
o Adding a term because it seems because it seems like the parties really
have agreed to it
• Implied in law
o Adding a term because it seems that the parties would have agreed to it
o Adding a term because our policies require that parties agree to it
• Why imply terms?
o Because parties would have agreed to the term (“tailored default”)
o Because most parties generally agree to such terms (“untailored default”)
o To save bargaining costs (“untailored default”)
o For public policy reasons (“penalty default”)
• Why not imply terms?
o Systemic cost of having courts figure out the precise terms to which
parties would have agreed
o Impossible to determine the precise terms to which parties would have

agreed
Case: Wood v. Lucy, Lady Duff-Gordon
o An agreement existed between the fashion designer and the marketer,
which gave the marketer authority to make sales and advertising
decisions.
o Essentially, the marketer had the power to license the fashion designer's
products to other marketers. The fashion designer subsequently marketed
her own products but did not share in the obtained revenue.
o The marketer filed a lawsuit for breach of contract and damages resulting
from the lost profits. The trial court denied the fashion designer's motion
for judgment on the pleadings, which was reversed on appeal.
o On final appeal, the court affirmed the ruling of the trial court, holding that
an implied contract existed between the parties.
o Specifically, the marketer's implied promise to faithfully market the
designer's products amounted to fair consideration creating performance
obligations by both parties.
• UCC § 2-306(2)
o A lawful agreement by either the seller or the buyer for exclusive dealing
in the kind of goods concerned imposes unless otherwise agreed an
obligation by the seller to use best efforts to supply the goods and by the
buyer to use best efforts to promote their sale
• UCC § 2-309 (2)(3)
o Where the contact provides for successive performances but is indefinite
in duration it is valid for a reasonable time but unless otherwise agreed
may be terminated at any time by either party
o Termination of a contract by one party except on the happening of an
agreed event requires that reasonable notification be received by the other
party and an agreement dispensing with notification is invalid if its
operation would be unconscionable
Case: Leibel v. Raynor Manufacturing Co.
o Appellant sought review of the summary judgment dismissing one count of
appellant's complaint, in an action brought by appellant following the
termination, by appellee, of appellant's dealer-distributorship agreement.
o The court held that reasonable notification was required in order to
terminate an on-going oral agreement for the sale of goods in a
relationship of manufacturer-supplier, dealer-distributor, or franchisee.
o The court also held that appellant's distributorship agreement should have
been recognized as an agreement for the sale of goods and subject to
provisions of U.C.C. art. 2.
o The amount of money being invested in distributorships was increasing,
distributorships were often not based on formal written agreements, and
without requirement for good fair play, either party to distributorship could
have been damaged.
o Therefore, the court held that because the distributorship agreement
between appellee and appellant was one for sale of goods, appellee was
required to give reasonable notification of intent to terminate
distributorship contract.
Implied Obligation of Good Faith
o UCC § 1-203 (Revised 1-304)
 Every contract or duty within this Act imposes an obligation of good
faith in its performance or enforcement
 Every contract imposes upon each party a duty of good faith and
fair dealing in its performance and its enforcement
• Situations where covenant of good faith applies:
o When implication of term is necessary to protect party expectations
o When termination or other action by one party appears to be pretextual or
in bad faith
o When exercise of discretion granted by contract should be limited by
principles of good faith
o When it is a condition of an obligor’s duty that he be satisfied with respect
to the obligee’s performance with respect to something else, and it is
practicable to determine whether a reasonable person in the position of
the obligor would be satisfied, an interpretation is preferred under which
the condition occurs if such a reasonable person in the position of the
obligor would be satisfied
Commercial Deals v. Deals involving an Aesthetic Matter
• For commercial deals:
o Reasonable person standard for determining work is acceptable
o Reference to industry standards, etc.
• For deals involving aesthetic matters
o Subjective determination of party given discretion is fine
o However, the determination must be honestly made (must truly be
dissatisfied with work)
Implied Warranties
• Implied Warranty of Merchantability
o U.C.C. 2-314
 (1) Unless excluded or modified (Section 2-316), a warranty that
the goods shall be merchantable is implied in a contract for their
sale if the seller is a merchant with respect to goods of that kind.
Under this section the serving for value of food or drink to be
consumed either on the premises or elsewhere is a sale.
 (2) Goods to be merchantable must be at least such as:
• (a) pass without objection in the trade under the contract
description;
• (b) in the case of fungible goods, are of fair average quality
within the description;

• (c) are fit for the ordinary purposes for which goods of that
description are used;
• (d) run, within the variations permitted by the agreement, of
even kind, quality and quantity within each unit and among
all units involved;
• (e) are adequately contained, packaged, and labeled as the
agreement may require; and
• (f) conform to the promise or affirmations of fact made on the
container or label if any.
 (3) Unless excluded or modified (Section 2-316) other implied
warranties may arise from course of dealing or usage of trade
o Applies to merchant sales
o Can be disclaimed by specific language
• Implied Warranty of Fitness for Specific Purpose
o U.C.C. 2-315
 Where the seller at the time of contracting has reason to know any
particular purpose for which the goods are required and that the
buyer is relying on the seller's skill or judgment to select or furnish
suitable goods, there is unless excluded or modified under the next
section an implied warranty that the goods shall be fit for such
purpose.
o Applies to all sales of goods IF there is specific purpose known to seller
o Disclaimer must be conspicuous & in writing
• Home Builder Warranty
o Warranty of Quality
o Free from defective materials
o Construction is good & workmanlike
o Compliance w/building codes
o No latent defects
• Implied Warranty of Habitability
o Housing codes are read into all residential leases as implied warranties
from landlord that the premises will be habitable (comply w/code)
o This warranty is mandatory (non-waivable)
Contract Avoidance
• A contract can be voided based on:

o The parties
 A party is able to get out of a contract, because the party is not able
to contractually bind themselves
 Lack of party’s capacity to truly assent
o The process
A party is able to get out of a contract because there was


something wrong or unfair with how the contract was formed
 Process deprived party’s ability to truly assent
o The substance
 A party is able to get out of a contract because there is something
wrong or unfair in allowing this sort of thing to be agreed to (either
in general or in this particular way)
 Terms are such that we will not allow assent
• Contract avoidance can be used as a sword or a shield
o Sword
 Defend against contract enforcement
o Shield
 Seek contract rescission
 Question of restitution for benefits conferred
• Courts are less sympathetic to cases of intoxication
 A person incurs only voidable contractual duties by entering into a
transaction if the other party has reason to know that by reason of
intoxication
• (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
Infancy Defense
• Infancy doctrine:
o The underlying purpose of the “infancy doctrine’… is to protect minors
from their lack of judgment and “from squandering their wealth through
improvident contracts with crafty adults who would take advantage of them
in the marketplace.”
o Unless a statute provides otherwise, a natural person has the capacity to
incur only voidable contractual duties until the beginning of the day before
the person’s eighteenth birthday
Case: Dodson v. Shrader
o Plaintiffs, minor and next friend, sought to disaffirm the contract of the
minor for the purchase of a pick-up truck. The issue was whether the
minor was entitled to a full refund of the money that he paid or whether the
sellers were entitled to a setoff for the decrease in value of the pick-up
truck while it was in the possession of the minor.
o The minor was 16 years of age at the time of purchase and used the
vehicle for nine months without incident. After nine months, the vehicle
had mechanical problems, but the minor continued to drive the truck until
the truck's engine "blew up" and the truck became inoperable.
o At the time of the purchase, there was no inquiry by defendant sellers and
no misrepresentation by plaintiff minor concerning his minority.

o Based on previous common-law decisions, the trial court reluctantly
granted rescission of the contract.
o The court remanded and adopted a new rule concerning contracts with
minors.
o Where the minor did not overreach, there was no undue influence, and the
contract was fair, the court held that the vender was entitled to reasonable
compensation for the use, depreciation, and willful or negligent damage to
the article purchased.
• Benefit Rule
o Upon rescission, recovery of the full purchase price is subject to deduction
for the minor’s use of the merchandise (see page 521 of casebook)
 Price – Minor’s use = Benefit Rule
• Use Rule
o The minor’s recovery of the full purchase price is subject to a deduction for
the minor’s “use” of the consideration he or she received under the
contract, or for the “depreciation” or “deterioration” of the consideration in
his or her possession
• Other exceptions to the minority rule:
o Minors are liable for reasonable value of necessaries they contract for
o If a minor fails to disaffirm a contract upon reaching 18, he will be held to
have affirmed it.
o Misrepresentation of age?
 A contract issue (fraudulent misrepresentation voids contract)
 A tort issue (can get damages for fraudulent misrepresentation)
o Statutory Exceptions to Infancy Doctrine
Mental Incapacity Defense

• Definition of “mental incapacity”
o Sufficient mental ability to know what she was doing and the nature and
consequences of the transaction
o Cognitive Standard (traditional view)
o Restatement § 15(1)(a) and alternate Volitional test
• (1) If a person incurs only voidable contractual duties by
entering into a transaction if by reason of mental illness or
defect
o (a) he is unable to understand in a reasonable matter
the nature and consequences of the transaction, or
o (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 subsection (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
o Restitution normally must be made
o Provided contract was made in good faith
o And provided contract was for fair consideration
• Policy for both infancy and mental incapacity defenses is to protect incapable
people
• Questions in fact
o Was there cognitive impairment (no reasonable understanding of the
transaction)
o Was there volitional impairment (no ability to control actions) plus
reasonable knowledge of this mental deficiency by the other party?
Duress and Undue Influence
• Elements of Duress
o Improper Threat
o Lack of Reasonable Alternative
o Actual Inducement of Contract
 Objective approach (would a reasonable person have been
induced?)
 Subjective approach (look at all attendant circumstances)
 (1) If a party's 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 party's 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
• Undue Influence requires:
o “Over-persuasion” applied to a person who is particularly vulnerable
 Over-Persuasion means free will is impacted
• Factors to consider:
o Negotiations at unusual/inappropriate time
o Consummation of transaction in unusual place
o Insistent demand to finish at once
o Extreme emphasis on consequences of delay
o Use of multiple persuaders on one victim
o Absence of 3rd party advisors (no time to consult)
 (1) Undue Influence is unfair persuasion of a party who is under the
domination of the person exercising the persuasion or who by

virtue of the relation between them is justified in assuming that the
person will not act in a manner inconsistent with his welfare
 (2) If a party’s manifestation of assent is induced by undue
influence by the other party, the contract is voidable by the victim
 (3) If a party’s 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 undue influence either gives value or relies
materially on the transaction
Fraud/Misrepresentation
• Elements of fraud
o Defendant made representations
o The statements were false
o They were material (formed basis of contract)
o Defendant knew they were false
o Defendant intended to deceive plaintiff
o Plaintiff relied on statements
o Plaintiff was damaged by relying on statements
• If a party can show that the other made a misrepresentation to him prior to
signing, he may be able to use this in either of two ways: (1) he may use this as a
defense in a breach of contract action brought by the other; or (2) he may use it
as the grounds for rescission or damages in a suit in which he is the plaintiff (see
page 129 of Crunchtime)
• Tort damage calculation
o Out-of pocket rule
o Benefit-of-the-bargain rule
• Restatement (Second) of Contracts § 169(a)
o To the extent that an assertion is one of opinion only, the recipient is not
justified in relying on it unless the recipient
 (a) stands in such a relation of trust and confidence to the person
whose opinion is asserted that the recipient is reasonable in relying
on it
Case: Syester v. Banta
o The elderly widow first went to the dance studio as a gift from a friend. On
her second visit, she was sold a small course of lessons. Thereafter, the
studio sold the widow more than 4,000 hours of instruction, including 3
lifetime memberships, and told her falsely that she could be a professional
dancer.
o Upon the widow's filing of a lawsuit, the owners persuaded her to settle for
a relatively insignificant amount and drop the action. A second release for
more money was obtained, but nothing was paid on that release.
o The widow filed a second action for fraud and misrepresentation in the
several sales to her and in obtaining the dismissal of the previous lawsuit
and the releases.

o The jury returned a verdict for the widow.
o On appeal, the court held that the evidence was adequate to find there
was a concerted effort constituting fraudulent overreaching
• When is there a duty to disclose?
 A person’s non-disclosure of a fact known to him is equivalent to an
assertion that the fact does not exist in the following cases only:
• (a) where he knows that disclosure of the fact is necessary
to prevent some previous assertion form being a
misrepresentation or from being fraudulent or material
• (b) where he knows that disclosure of the fact would correct
a mistake of the other party as to a basic assumption on
which that party is making the contract and if non-disclosure
of the fact amounts to a failure to act in good faith and in
accordance with reasonable standards of fair dealing
• (c) where he knows that disclosure of the fact would correct
a mistake of the other party as to the contents or effect of a
writing, evidencing or embodying an agreement in whole or
in part
• (d) where the other person is entitled to know the fact
because of a relation of trust and confidence between them
Case: Hill v. Jones
 In response to the buyers' inquiry of whether a ripple in the home's
floor was termite damage, the sellers answered that it was water
damage.
 The termite inspection report placed in escrow as provided by the
purchase agreement stated there was no visible evidence of
infestation, but failed to note the existence of physical damage or
evidence of previous treatment.
 After the purchase, the buyers discovered termite damage and
learned of past termite infestation of which the sellers had
knowledge.
 The court held that (1) the contract's integration clause could not
shield the sellers from liability should the buyers be able to prove
fraud in the statement that the ripple was water damage; (2) the
seller had a duty to disclose to the buyer termite damage known to
the seller, but not to the buyer, if it materially affected the property's
value, (3) the buyers should have been allowed to present their
case to a jury because the issue of whether the termite damage
was material was a factual matter for the trier of fact to determine,
and (4) the issue of the buyers' knowledge of the termite problem
and their diligence in attempting to inform themselves should have
been left to the jury.
o Seller has no duty to disclose anything unless:
Seller has fraudulently concealed the state of the property


Seller has made an affirmative misrepresentation

Seller has some sort of confidential or fiduciary relationship with

buyer
o Innocent non-disclosure
 Tort requires scienter
 But rescission can theoretically be based on innocent
misrepresentation OR non-disclosure
 But – most courts require actual knowledge before other party can
rescind
 Or at least reckless or negligent non-awareness
Unconscionability/Adhesion Contracts
• There is no accepted definition of unconscionability
o The issue is whether the clause is so one-sided, so unfair, that a court
should as a matter of judicial policy refuse to enforce it (see page 130 of
Crunchtime)
• Two categories of unconscionability
o Procedural
 Lack of meaningful choice
• Burdensome clauses tucked away in the fine print boilerplate
• High pressure salespeople who mislead
• Industries with few players, all whom offer the same unfair
“adhesion contracts”
o Substantive
 Unreasonably favorable terms
• Excessive price
• Limits the buyer’s remedies for breach by seller
o Disclaimer or limitation of warranty
o Limitation of remedy to repair or replacement, where
this would be a valueless remedy
o See other examples on page 132 of Crunchtime
 If a contract or term thereof is unconscionable at the time the
contract is made a court may refuse to enforce the contract, or may
enforce the remainder of the contract without the unconscionable
term, or may so limit the application of any unconscionable term as
to avoid any unconscionable result
o UCC § 2-302
 (1) If the court as a matter of law finds the contract or any term 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
• Adhesion contract is an imprecise term used to describe a document containing
non-bargained clauses that are in fine print, complicated, and/or exceptionally
favorable to the drafter (see page 130 of Crunchtime)
• Elements of adhesion contracts
o Disparity in bargaining power (Typically the non-drafter has very little
bargaining power)
o Standard form drafted by “superior” party
o Contract offered on take-it-or-leave-it basis (no opportunity to negotiate
terms) - or only price term negotiated
• Dragnet Clauses
• In several cases, arbitration clauses have been deemed unconscionable
o The preliminary question is, “can the underlying issues go forward in court,
or must they have to be arbitrated?”
o How is Arbitration unlike Litigation?
 Private
 Different rules
 More informal
 Binding
o Arbitration Agreements can be avoided like any other contract (incl. for
unconscionability)
 I never assented
 No consideration for that provision
 Duress
 Fraud
 Undue Influence
 Etc.
o Typically unconscionability is highly debatable
 Consumer (waivers)
 Employer/Employee contracts
Case: Higgins v. Superior Court of Los Angeles County
o The siblings claimed that an arbitration clause contained in a written
agreement they executed before the program was broadcast was
unconscionable.
o The court agreed, holding that the arbitration clause was procedurally
unconscionable.
o The siblings were young and unsophisticated, and had recently lost both
parents.
o The arbitration provision appeared in one paragraph near the end of a
lengthy, single-spaced document. No words were printed in bold letters or
larger font, nor were they capitalized. Although the siblings were required
to place their initials in boxes adjacent to six other paragraphs, no box
appeared next to the arbitration provision.
o The arbitration provision was also substantively unconscionable. It
required only the siblings to submit their claims to arbitration. Only the
television defendants, not the siblings, could compel arbitration.
o The arbitration provision barred only the siblings from seeking appellate
review of the arbitrator's decision.
o The harsh, one-sided nature of the arbitration provision, combined with the
elements of procedural unconscionability, led the court to conclude that
the arbitration provision was unconscionable and, therefore,
unenforceable
Policy
• Law is the embodiment of public policy

• The big public policy in contract law is the freedom to contract
• Illegal contracts:
o Criminal Statutes
o Regulatory Statutes
 Protect public
 Raise revenue
• Exculpatory Clauses
o “I agree I won't hold you liable for anything you may possible do”
 This may be okay
 but you can't contract out of intentional torts…
o If people want to waive their ability to see, that's fine (some people make
this argument)
 But why not allow disclaimers for dangerous activities…?
o Benefit vs. Cost to Society
 Debatable
 Unresolved
o Ancillary vs. Non-ancillary restraints on competition
 Restatement (Second) of Contracts § 187 Non-Ancillary Restraint
• A promise to refrain from competition that imposes a
restraint that is not ancillary to an otherwise valid transaction
or relationship is unreasonably in restraint of trade
 Restatement (Second) of Contracts § 188 Ancillary Restraint
• (1) A promise to refrain from competition that imposes a
restraint that is ancillary to an otherwise valid transaction or
relationship is unreasonably in restraint of trade if
o (a) the restraint is greater than is needed to protect
the promisee’s legitimate interest, or
o (b) the promisee’s need is outweighed by the

hardship to the promisor and the likely injury to the
public
• (2) Promises imposing restraints that are ancillary to a valid
transaction or relationship include the following
o (a) a promise by the seller of a business not to
compete with the buyer in such a way as to injure the
value of the business sold
o (b) a promise by an employee or other agent not to
compete with his employer or other principal;
o (c) a promise by a partner not to compete with the
partnership
 Restraints on trade that are ancillary
• Enforceable in some circumstances, but
they will be scrutinized
• Concept: restraint only valid to the
extent necessary
• Any overreach will be struck down
Case: Valley Medical Specialists v. Farber
o Defendant doctor, an internist and pulmonologist,
entered into an employment agreement with plaintiff
employer that contained a restrictive covenant not to
compete.
o After defendant doctor left the practice and began
practicing within the area defined by the restrictive
covenant, plaintiff sued defendants based on the
restrictive covenant not to compete.
o The trial court denied plaintiff's preliminary injunction
request and held that the covenant violated public
policy, or alternatively, was unenforceable because it
was too broad.
o The appellate court reversed and held that the
covenant was reasonable. On review, the court stated
that because the doctor-patient relationship was
special, it was entitled to unique protection.
o Furthermore, based on public policy interests,
covenants not to compete between physicians were
to be strictly construed for reasonableness.
o The court held that the covenant was unenforceable
because plaintiff failed to prove that its interests
outweighed public policy interests. The duration and
geographic scope were unreasonable
 Is the restraint reasonable?
• Time limits
• Geographic limits
Balancing of policy interests


• Balancing of hardships
o Benefit of non compete (to promisee)
• Must be legitimate for example:
o Goodwill in sale of business
o Retirement
o Prospective Partner
 I'm a partner with you, but
at the same time
competing with you
 Good faith
o Trade secrets/ Unjust use
 There is a difference
between saying "you can't
work on computers for 3
years" vs. "you cannot do
a particular type of
networking"
 All strong reasons to
enforce a non-compete
o Cost of non-compete
 To Promissor
 To society in general
 What to do if unfair or unreasonable
• Void contract (rescission)
• Void the clause (severance)
• Rewrite the clause (reformation)
• To blue pencil or not blue pencil…?
o Editing something out
 Changing the contract terms(?)
• Limiting Family
o Contracts unreasonably restraining marriage are void for public policy
reasons
o I'll pay you $ if you don't marry him
o I'll pay you $ if you leave your spouse…
o Courts don't like these
o Restatement (Second) of Contracts §191
 A promise affecting the right of custody of a minor child is
unenforceable on grounds of public policy unless the disposition as
to custody is consistent with the best interest of the child

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*All items highlighted have to be reviewed

Case: Plowman v. Indian Refining Co...................................................................................22

Sources of Contract Law

Objective vs. Subjective Theories of Contract

Objective Theory (see page 23 of casebook)

What is a contract/ Contract formation

• Contracts are a common understanding as to something that is to be done in the

When is a contract formed?

by the fact that the parties also manifest an intention to

o The notion of “contract” typically involves an element of futurity:

(see page 55 of Crunchtime)

• The offeror is the “master of his offer”

• Too much time has passed:

o An offeree’s power of acceptance is terminated by his making of a

Revocation of an Offer/Termination of the Power of Acceptance

• Performance on a unilateral contract renders the offer temporarily irrevocable

Battle of the Forms

• Businesses love forms because they:

written confirmation then a contract is formed even if

of the offer or oral agreement

buyer’s failure to meet any

"C.I.F." shipping term

o Offer + Acceptance = Mutual Assent

Key concept of Consideration/Overview

promise must be bargained for.

enough to void the contract

forbears or promises to forbear from doing something which he is not legally

o Not sought by the promisor

Promises to make a gift

Negotiations in Good Faith

•Restatement of Restitution § 116 Elements:

• 3 types of electronic transactions:

• In general, there is no need for agreements to be in writing; however, there are

of contract action related to an employment contract.

the statute will not be used (see page 94 of Crunchtime)

the oral contract, which would have been

Contracts for Land

•What is the required writing under the UCC?

If yes, then the other party's meaning will control

Parol Evidence Rule

• When parties to a contract have mutually agreed to incorporate a final version of

 This approach will look at everything,(including the intent of the

question. The existence and scope of such a usage are to proved

Supplementation of the Agreement: Implied Terms

o Impossible to determine the precise terms to which parties would have

within the description;

• A contract can be voided based on:

A party is able to get out of a contract because there was

no misrepresentation by plaintiff minor concerning his minority.

Mental Incapacity Defense

power of avoidance under subsection (1) terminates to the

domination of the person exercising the persuasion or who by

and the releases.

Seller has fraudulently concealed the state of the property

(2) When it is claimed or appears to the court that the contract or

• Law is the embodiment of public policy

o (b) the promisee’s need is outweighed by the

Balancing of policy interests

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