1. Are we in UCC or Common Law?

Goods vs. Services [princess cruise test]

Go to C-Law or UCC sheet
o Both Merchants?
2. Formation Issues [oral or written]
At what point was there a contract?
o Agreement formed from preliminary negotiations
o Agreement to negotiate in good faith
o Formal contract contemplated
Offer
Acceptance
Consideration
Revocation?
Part performance?
Battle of the forms
3. Does statute of frauds apply?
6 types of contracts
Is there a writing to satisfy the SOF?
o Essential terms
If no, is there an exception?
4. Contract Interpretation
Integrated Writing/Partially Integrated Writing
Parol Evidence Rule
o Exceptions
5. Other relief theories
Promissory Estoppel
Unjust Enrichment
6. Implied Terms
Good faith
Warranties only in UCC except for residential leases/homebuilders
7. Contract Avoidance
Minority
Undue Influence
Duress
Incapacity
*** Are we in UCC or common law?
*** CHECK FORMATION FIRST

Contracts I Boyack Fall 2010

1.

DOES Statute of Frauds APPLY?

Statute of Frauds is: an additional requirement for contract to be enforceable.

Non-compliance with the statute of frauds is an affirmative defense
1.
Executor/Administrator to pay debts of estate from his own assets
2.
Suretyship (debtor, creditor, surety) <~~3 parties
a.
Surety promises to pay if debtor fails [there is consideration for promise,
but surety isnt recipient of consideration]
b.
EXCEPTION: If surety makes promise for his own benefit and
receives some direct economic benefit from doing so; oral is
enforceable
3.
Promises in consideration of marriage [prenuptial, contingent on others marriage]
4.
Contracts for the transfer of any interest in land (including leases, easements,
mortgages, purchase agreements, deeds)
5.
Contracts that cannot be performed in one year
a.
Performance must take longer than one year (if any way to be performed
or terminate according to its terms in one year, no writing required);
Breach is not a natural termination.
b.
Performance will not be completed within a year of contracting; it would
be breach of contract to perform before the one-year date.
6.
Sale of goods under UCC over $500 [SEE UCC]
7.
Other specific consumer contracts (certain loans and cc transactions)
If mods to any of these, mods must also be in writing
2.
IF SOF APPLIES, IS WRITING SATISFIED?
Writing must have:
PROMISE + ESSENTIAL TERMS [PRICE] + SIGNED BY D /party to be
charged
Writing can be pieced together tacking If, essential terms, at least one doc
signed by D, and unsigned doc on face references other doc, assent to terms
of unsigned doc
Signature may be sufficient to AUTHENTICATE but not to BIND.
3.
IF SOF APPLIES BUT WRITING IS NOT SATISFIED [IS THERE AN
EXCEPTION]?
Bars to SOF defense: D waived right to defense, D affirms validity of contract,
FULL performance of contract (cant waive previously completed K)

Partial Performance (Real property ONLY) equitable remedy, not in suit for
damages:
Has buyer taken possession?
Payment of all or part of purchase price?

Contracts I Boyack Fall 2010

Valuable improvements made by buyer?

CLASSIC ESTOPPEL: NO SOF defense exists for a D who: [NOT ALL STATES
HAVE ADOPTED]
1.
promises he already signed a writing
2.
promises that he will sign a writing
3.
assured that no writing is required (and there is RELIANCE)
Promissory Estoppel [NOT UNIVERSALLY ACCEPTED] underlying promise of
contract; creates CONTRACT REMEDY b/c THERE IS CONSIDERATION, just
removing the WRITING issue. [relies on oral promise of CONTRACT not of WRITING]
Must show: Promise + Reliance + Detriment + Injustice.
Injustice: Availability and adequacy of other remedies.
Make sure there was CLEARLY a contract.
Restitution: DONT FORGET ABOUT USING IT (wont fix SOF but would give you
FMV of services)
1.
WAS there a contract? (1 Contract defined)
Implied in fact contracts are agreements that meet all of the requirements of contract
except that the agreement is implied rather than express (doesnt have to be oral/written;
can be actions)
AT WHAT POINT IS THERE A CONTRACT?
1. Contract formed as a result of preliminary negotiations
a. Was there objective commitment by both parties to be bound?
REASONABLE PERSON TEST
i. Language of preliminary negotiations, specificity, actions, formal
contract contemplated?, reservations of commitment?
2. Contract is an agreement to negotiate in good faith
a. What is good-faith?
b. Was there consideration? [promise in exchange for promise. If one sided,
use PE to recover]
c. Was there reliance?
d. What is recovery? [reliance damages hard b/c speculative - no K
guarantee]
3. Contract is not finalized until formalized
a. If party has reason to know no obligation exists until other terms assent to
b. Factors to consider:
i. Are they normally put in writing?
ii. Were we missing lots of details?
iii. $$ is it a very large amount?
iv. Standard form?
v. Was any preparation for performance taken?

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vi. Statements or actions during negotiations, trade usage, course of

dealings or performance

2. WAS THERE A PROMISE?

a. RULE: Manifestation of objective commitment to be bound (Oral, written, or
conduct (CHECK FOR CONTRACT AVOIDANCE THEORIES)
i. Not just a prediction or intention for something to happen
ii. Can be a combination of statements = promises
iii.
Reasonable person test Objective Theory
1. EXCEPTION: not enforced if promisee knows promisor did
not intend to be bound; promisors subjective intent means
nothing
2. 77 Illusory promises: NO ONE is bound. (MAKE SURE
YOU DONT HAVE REQUIREMENTS/OUTPUT K
UNDER UCC)
2.

WAS THERE AN OFFER?

b. Remember, only assent from the other side is needed (Yes, OK, done).
i. No further assent needed by offeror
ii. Rule: An offer is a communication of a commitment to be
bound to specific terms subject only to a promisees
acceptance.
c. Distinguish offers from invitations for an offer or preliminary
negotiations (look for important terms)
i. Advertisements to the general public create mere invitations to
offer (26)
1. Rule: If the ad objectively manifests a commitment to be
bound, subject only to acceptance by a buyer, then it is an
offer.

3.
WAS OFFER REVOKED/TERMINATED?
Offeror can generally revoke offer any time prior to acceptance. Unless option paid
for with consideration (See CONSIDERATION section)
d. Ways to revoke/terminate offer (36)
MAILBOX: Offers and Revocations of offers are effective
UPON RECEIPT (not dispatch)
1. Offeree rejects or makes a counteroffer
a. Unless offeree manifests intent to the contrary, a
counter-offer terminates the offerees power of
acceptance (unless offeree says otherwise,
counteroffer = rejection as well as new offer)
i. Offeror explicitly revokes
ii. Offeree receives communication (from anyone) that offer is no
longer open

Contracts I Boyack Fall 2010

3.

iii. Expiration by terms of the offer

iv. Expiration by lapse of time (factual question how much time is
enough to terminate?)
v. Offer terminates upon incapacity, death, etc. (death doesnt revoke
an offer if its already been accepted)
vi. Special situation of unilateral contract w/performance started
(Restatement 45)
WAS THERE ACCEPTANCE?
a. Rule: A reply which is conditional on the offerors assent to terms
additional or different than from those offered is not an acceptance but a
counter-offer. [Mirror Image Rule] ONLY IN COMMON LAW NOT
UCC
b. FORM OF ACCEPTANCE INVITED (30): Any manner, by any
medium reasonable UNLESS indicated otherwise by language or
circumstances.
c. You cant accept an offer you dont know about.
d. Mailbox Rule
i. Offers and Revocations of offers are effective UPON RECEIPT
(not dispatch)
ii. Acceptances of offers are effective UPON DISPATCH (not
receipt)
e. Unilateral Contracts (ACCEPTANCE BY PERFORMANCE)
i. If the offeror mandates that the only way to accept is by
performance and until acceptance (required performance is
rendered) neither party is bound
1. Promise or performance: unless they state that you have to
accept by performance, you can accept by promise, in
which its not revocable before you perform. (lady who
wants cousin to watch dog example)
2. If person rendering performance knows the other person
would have no way of knowing, contractual duty of offeror
discharged UNLESS
a. Offeree notifies reasonably
b. Offeror learns of performance w/in reasonable time
c. Offer indicates no notice needed
ii. 45: When offer invites performance as acceptance, not promise,
the beginning of performance creates a pseudo-option contract (or
an irrevocable offer); beginning of performance usually creates
implied promise to complete performance
iii. These cant be revoked by offeror (or changed) during the period
of the option What act = START of performance
1. And did performer reasonably notify of the start of
performance?
2. And has the performer been reasonably diligent in
continuing to perform (through completion)?

Contracts I Boyack Fall 2010

*safe to start performance, make sure they know that, and continue to perform.
4.
WAS THERE CONSIDERATION?
Rule: Something of value to either the promisee or the promisor of a contract that is
given or will be given by the promisee to the promisor in exchange for a
performance or a promise of a performance by the promisor.
1.
2.
3.

4.
5.
6.

7.

Bargained for exchange

RULE: Benefit/Detriment Test Yes if the exchange results in either a
benefit to the promisor or a detriment to the promisee (QUID PRO QUO)
RULE: Self-interested motive (more than just good feelings or love) that
induced the promise
a. In Hamer possibly a benefit (unexpressed), and an
expressed detriment (losing the legal right to do
something).
b. It isnt a benefit/detriment to bribe someone to do
something they are already bound to do
c. NOT A GIFT
i. Anti palimony reduce to writing and make
express that it is a joint venture.
Partial motivation is sufficient
If a benefit accrued to the promisor by giving something away for free,
then consideration existed even though no money actually changed hands
We dont care about adequacy; general rule is: you need sufficient (aka
actual) consideration
1. Gross inadequacy may be an indication that a bargain is tainted
by fraud, mistake, misrepresentation, duress, or undue influence.
An exception to the past consideration bar: There IS a way to have
something that has past furnish consideration for a present promise:
a. Plowman -- ONE type of exception to the past consideration = no
consideration rule: A promise to make good on past legal debts that are
barred by some technicality
There WAS a legal debt owed, but now it cannot be legally
recovered because of one of 3 situations:
1. Debt is barred by bankruptcy
2. Debt is barred by statute of limitations
3. Debt is barred because when debtor
incurred it, he was below the age of legal
consent (under 18).
b. (no consideration needed for modifications): modification will be
binding IF
it is motivated by unforeseen circumstances AND
it is fair & equitable
(note harder to modify under Restatement approach than UCC
must prove unforseen circumstances and fair/equitable terms)

Contracts I Boyack Fall 2010

For Unilateral Contracts: (The performance must be motivated by the offer must have
been accomplished as an acceptance)

5.
OTHER RELIEF THEORIES:
EQUITABLE ESTOPPEL
1. Elements of EQUITABLE ESTOPPEL:
a) Statement of fact
b) Made w/intention that it be relied on
c) It is actually, reasonably relied on
d) Detriment to the person relying
e) Injustice in allowing fact stated to be disavowed
PROMISSORY ESTOPPEL
a) Promissory estoppel requires PROMISE (commitment
first step in contract)
b) RELIANCE: Reasonable, foreseeable, detrimental
(Silence can be confirmation of promise during period of reliance)
Does reliance have to entail a monetary cost?
i. NOT always: Court found that a jury could find
detrimental reliance based on the differences between
the new job and the old job, i.e. different levels of
stress associated with different jobs
c) Injustice
Sliding scale:
The more formal a commitment, the less reliance is needed
And the less formal a commitment, the more reliance is needed
Difference between detriment in consideration & detriment in reliance?
The detriment that constitutes consideration must be bargained for, or sought by
the promissor, whereas the detrimental reliance under promissory estoppel theory
need not have been sought by the promisor.
CHARITABLE SUBSCRIPTIONS AND RESTATEMENT
Three approaches: Treat as K and look for consideration, stretch to find
consideration, if promise, reliance, detriment, injustice, use PE, or use 90(2)
90(2) ONLY ADOPTED BY IOWA
In the context of a charitable subscription the Restatement 90(2) does not require a
showing of reliance
A charitable subscriptionis binding without proof that the promise induced
action or forbearance
But even in jurisdictions using 90(2) courts might sneak in a look at reliance - in
the injustice element.
UNJUST ENRICHMENT
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Implied in law contracts are not contracts, it is an obligation imposed by the law
without regard to either partys expressions of assent either by words or acts.
Benefit no promise needed
Injustice
Remedy is: restitution (pure equity); based on breach of duty
Defenses: No benefit was accepted; Retention of benefit was not unjust
Promissory restitution (unjust enrichment w/ a promise)
Moral obligation or material benefit
Breach of promise
Remedy is: right to contract remedies
The Material Benefit Rule: youve been unjustly enriched by a benefit previously
received (past consideration not sufficient unless expectation of repayment and unjust not
to enforce) (treats detriment as contemporaneous with promise only binding to extent to
prevent injustice) or
Under 86 of the Restatement; promise for a benefit received (escaped bull, medical care,
women cleaning house)
Moral Obligation
1st: Debts barred by a statute of limitations ( 82)
2nd: Debts of debtors in bankruptcy ( 83). Note: a court will not imply promise to
revive debts discharged in bankruptcy (must be express promise)
3rd: Contracts made by a minor. ( 85)
Note: these are all cases of PRIOR legal obligations (moral is a misnomer here).
116 of the Restatement of Restitution person who supplies services, although acting
w/o others knowledge if entitled to restitution if:
1. unofficiously with intent to charge AND
2. things/services needed to prevent serious bodily injury or pain AND
3. no reason to know other would not consent AND
4. impossible for other to give consent
Problem will be the intent to charge.
20 Restitution: Protection of Life/Health
Professional services to treat life/health has claim for restitution to reasonable value of
services
107(2): Implied-in-fact created when someone requests services performed or transfer of
property: infer bargain to pay.
117: Preservation of anothers things or credit
Lawful possession of things he took
Reasonably necessary to render services before being able to communicate with owner

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No reason to believe owner wouldnt want you to act

Intended to charge
Things have been accepted by owner
Courts have been reluctant to find intent to charge when plaintiff is a nonprofessional
NY legislation: statute that specifically allows promise based on moral obligation to be
enforceable if made in writing & signed by promisor
COMMON LAW Option contracts (mini contracts): A promise to keep an option open
is only enforceable if the promise is paid for (by some exchange supported by
consideration) PROMISE + CONSIDERATION (T4, NO ABILITY TO REVOKE
OFFER)
MAILBOX RULE DOES NOT APPLY TO OPTION CONTRACTS
Three approaches to consideration in option contracts (sliding scale)
Classical contract view (actual consideration)
Formality requirement as a substitute for consideration (NOMINAL
CONSIDERATION)
Or, following 87(1)(a), since nominal consideration is just formality
anyway, formal language used as a substitute for consideration in option
contracts (magic language or PURPORTED CONSIDERATION
approach) (adopted by Texas & a handful of other states)
You dont need consideration for an option contract if it is part of your rights purchased
under another contract. Ex: option to renew lease in an existing lease contract. (You are
already paying rent).
You can revoke before your time is up, and then change your mind and thats okay.
CONTRACTING SITUATIONS
Ex: prime bids on contract (extends offer to client); uses subcontract prices (uses lowest
bid of sub); awarded contract by client (acceptance); sub revokes.
Issue: even if subs bid was an offer, no communication of acceptance before it
was revoked. Also cant argue classical contract theory b/c difficult to make
argument that sub expected to be bound by mere use of bid.
Argue option K? No factual basis to imply a promise. Hard to show any consideration.
James Baird Application of promissory estoppel to an unaccepted offer a big
change in law
Promise: IMPLIED (sub keeps bid open for reasonable time so prime can accept
as soon as awarded contract)
Reasonable expectation: prevailing practices in the industry: sub should realize
prime may use his bid. Precludes recovery if prime knew there was a mistake.
Contracts I Boyack Fall 2010

Enforcement necessary to avoid injustice: Did they act in good faith to accept
bid? Did they bid shop?
Remedy: Necessary to have a claim for breach of contract because offer is being
kept open by PE. Would hold sub liable for extra cost of using another sub
reasonably.

1. Drennan: used 45, the law anticipates the protection of a promisee who has not yet
accepted an offer if theyve started to rely on it and draws analogy to the situation in
Drennan (sort of like starting performance) A critique: 45 is NOT really the same
thing as the estoppel substitute for acceptance here. Most later cases in area of
GC/Sub bidding follow Drennan
2. Fair to hold sub to its offer b/c should have realized bid would be relied upon.
87(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
But the principle set forth in 87(2) has not necessarily been embraced by
courts outside of the general contractor/ subcontractor problem (but the
concept is now in the law and it sometimes crops up in other scenarios)
When are they not bound?
Express revocability
Post-award bid shopping
Mistake known to GW
Offer only expressly an estimate
General rule: Revocation is only precluded if:
Option contract exists
Unilateral contract + part performance (Restatement 45)
Restatement 87(2) (if it applies)
Rule is that promissory estoppel MAY create an option contract in absence of
consideration. Restatement 87(2)
Basic Recovery
Contract where you would have been with contract
Promissory Estoppel recovery based on reliance (not full, but reimbursement for
actual loss)
Restitution strips you of benefit
ELECTRONIC CONTRACTING
1.
Shrinkwrap
Terms are included within packaging sellers sale is offer
Customer accepted by keeping purchased item
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10

How do we deal with these new terms proposed?

o Buyer can a)return or b)keep acceptance?

WHO OFFEROR IS May determine if 2-207(2) is applicable (new terms or not)

2.
Browse-wrap
Terms included on website but buyer not required to click I agree
Assent implied by use
Usually terms of a license agreement [not in UCC] than a purchase contract
Enforceable if 4 Requirements Met:
User is provided w/ adequate notice of the existence of the proposed terms
Use has a meaningful opportunity to review terms
User provided w/ adequate notice that taking a specific action manifests assent to
the terms
User takes action specific in the latter notice.
3.

Click-wrap
I accept required
Clicking is adequate manifestation of assent

CONTRACT INTERPRETATION
Unambiguous meaning is question of law not question of fact; court will then bring
in evidence so finder of fact can determine meaning
Subjective
Intent (autonomy)
Might not mean the same thing
Hard to determine (inefficient)
East to avoid enforcing agreements
Objective
Plain meaning
Efficient and fair
Might enforce unwanted term no one intended
Expectation/predictable/efficient
Words can have multiple meanings
Modified Objective Approach
Agreed upon meaning trumps subjective approach to agreed terms
If disagreement, see 201(2)
o Did parties know what other thought?
o Did they have reason to know?
o Least cost avoider of confusion bears burden to clear up risk

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11

o If neither know or have reason to know court may find no contract or

interpret to create result and gap fill
How to interpret:
1. Look at language of contract
2. Look at words surrounding
Something can be incorporated by reference
3. Look at negotiations
True intent can be shown by course of conduct
4. Trade usage
5. Legal standards
6. Best guess/common sense Posner; reasonable construction
Methods of interpretation:
I.
Ordinary, general meaning (not technical)
II.
Favor what validates purpose of K
III.
Specific term preferred over general
IV.
Handwritten trumps pre-printed
V.
General limited by specific words
VI.
Meanings affect other words
VII. CONTRA PROFERENTUM: CONSTRUE AGAISNT DRAFTER
(last resort or when unequal bargaining power)
Interpreting Adhesion contracts:
What makes adhesion contract?
Standard form (not sufficient in itself); non-negotiable; imbalance of power
Still valid/binding but
o 1. Construe against drafter OR
o 2. Apply reasonable expectations test.
Reform contract to give effect to reasonable expectation of least
advantaged party even if explicit language says otherwise
SOME COURTS LIMIT TO ONLY INSURANCE POLICIES.
FL REFUSES TO ADHERE.
Customer not bound to anything couldnt have reasonably expected. Cant sneak
in terms you know someone wouldnt agree to.
o How do you prove they wouldnt have reasonably expected?
Bizarre/oppressive test
Eliminates dominate purpose of contract
More likely to not have had opportunity to read, illegible, or
hidden terms
PAROL EVIDENCE
Rule of substantive law!
Cannot contradict writing or vary terms of integrated writing
If partially integrated, can supplement but not contradict
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12

If integrated writing no new evidence allowed (four corners

approach/classic/willistonian or, look at evidence to determine if integrated
restatement approach/liberal/corbin)
Merger clauses can signal complete agreement but arent dispositive of a
complete agreement.

EXCEPTIONS: what can ALWAYS come in:

1.
Contract is invalid (fraud, duress, minor)
2.
Collateral agreement (new contract/separate agreement)
- doghouse collateral, warranty not
3.
Oral condition precedent to formation (gives validity)
4.
Evidence of no consideration
5.
Future agreements
6.
Equitable remedy (judicial reformation)
7.
Anything let in to interpret contract if ambiguity.
Implied Terms
In fact solely on intent of parties
In law could be intend, what most parties would intend, imposed by court b/c of policy
Good Faith [look at purpose of K and expectations of parties]
Best Efforts (objective/subjective)
Fiduciary
Joint-maximization
Usage of trade
Lack of bad faith
Reasonable Efforts
Objective
Two standards to apply good faith trier of fact will decide
Subjective honesty in fact
Objective of observations and reasonable standards.
A partys right to approve for some sort of work provided or product delivered is limited
by good faith.
Satisfaction:
Honest (subjective)
Reasonable person (objective)
When partys discretion is aesthetic, courts say party can reject based on subjective
dissatisfaction (rather than objective)
Wood v. Lucy, Lady Duff
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13

implies good faith (consideration would fail if not) to exclusive license contract
Cardozo: implies reasonable efforts
o If not exclusive license agreement: the minute you sell goods, you have a
contract. (unilateral offer, accepted by performance)
o Non-exclusive arrangements are not contracts yet just price quotes
You can bargain around reasonable efforts if you do so explicitly

BREACH OF CONTRACT CLAIM FOR BAD FAITH

What is bad faith vs. good faith
1. Concealing defect / fully disclosing material facts
2. Willfully failing to perform in full / substantial performance without deviation
3. Abusing bargaining power to create price increase / no abuse
4. Preventing broker you hired from closing deal / cooperating
5. Lack of diligence in mitigating other partys damages / diligence
6. Arbitrarily exercising power to terminate contract / acting reasonable
7. Adopting overreach of contract language / fair interpretation
8. Harassing other party for assurances of performance / adequate assurances
Warranties
SERVICE: THERE IS NO WARRANTY FOR SERVICES MUST ARGUE GOOD
FAITH PERFORMANCE OF CONTRACT
Warranty of Habitability or Warranty of skillfull construction (homebuilders sales)
Decent quality and fit for habitation
Home is free from defective materials
Construction is good and workmanlike
Compliance with local building codes AND
o Home is habitable
You can live in it
No latent defects
present and capable of emerging or developing but not now
visible, obvious, active
Implied warranty of habitability in leases
NON DISCLAIMABLE
Housing codes read into all residential leases
o What about commercial?
Contract Avoidance _ NO COMMITMENT TO BE BOUND
Infancy doctrine
Rule: minor can decide to get out of, therefore Ks with minors are voidable.
Put them back the way they wuz! (neither party gets benefit of K)
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o What if you cant?

o Exceptions
Kobe Bryant rule: you affirmed after an adult
If you fail to disaffirm or expressly affirm
Contract is for necessities (PH not one) make sure you say its not
Minor is using it as SWORD in situation where consumable goods
Rule: IF Recission would cause loss to other party, value of recovery limited by
Restitution IF JUSTICE SO REQUIRES WHEN:
o Majority: if minor had been a bad actor (lied, deliberately destroyed)
o Minority: anytime consumed situation UNLESS party who contracted:
Took advantage of minor
Acted in bad faith (overreaching, unfair terms)
o What is recovery limited to?
Either benefit (fair value of benefit given to minor) or
Use cost to other party of minors use
Intoxication
Less sympathetic. Only if SO drunk that you cant understand what is happening AND
other party has reason to know of that
Duress
1. Physical threat (overcomes will of reasonable person) - traditional
2. Threat to persons property
3. Economic Duress
a. Improper threat
i. Prosecution, tort/crime, breach of duty of good faith (not always
bad faith to breach contract though, be careful)
b. No reasonable alternative time, $$ sensitive /pressure
c. Causation (threat must induce the action)
1.

Contract procured by the threat = automatically void

**argument against people in dire straits vs. inducement of contract b/c that party
caused the economic duress (not all courts agree).
Undue Influence
Odorizzi still had understanding but some amt of incapacity/duress together
Causation issues with duress: policy was to fire him, publicity do they have to? Or is
motive to ruin his life?
Need: fragile state, but still cognitive ability (elder, sick, severe emotional strain,
UNDULY SUSCEPTIBLE) (special relationship makes this stronger)
AND Excessive pressure convincing/compelling
Factors:

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15

1.
2.
3.
4.
5.
6.
7.

Unusual/inappropriate time
Consummation @ unusual place
Demand to finish
Consequences of delay
Multiple persuaders
Absence of advisers
No time to consult (Statements made)

Theory Shit
Contracts
Freedom of contract
o Efficiency interest win-win
o Liberty interest freedom to enforce
o Reliance interest peoples expectations

Charity
o 90(2)

Remove uncertainty
Protect interests in charities/donors - formality
Reduce litigation
Flexibility remains (non binding promises allowed still)
Chilling on donations
Policy issues

Parol Evidence
o Evidentiary
o Cautionary
o Channeling

Contract Avoidance
o Classical approach
No value judgments/referee/enforcer/no paternalistic juidicary
o Policies of Protection
When is protection really oppressing freedom to contract?
Minors: protect contracting parties, minors can cherry pick,
discourage contracting with minors

Warranty of habitability
Caveat emptor is old fashioned
Industrialization of homes; inability to bargain
Lack of ability to inspect
Builder is least cost avoider
Last Shot Rule
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Arbitrary (no ones reads)

Favors sellers (they send last documents acknowledgement)
Didnt intent to be bound to those terms

CONTRACTS UNDER UCC

NEVER A SUBSTITUTE FOR QUANTITY(unless you have output/requirements
K) ONLY ESSENTIAL TERM
103-4 GOOD FAITH IMPLIED AND NOT WAIVED cannot be disclaimed
Good faith is opposite of bad faith; What is bad faith: voluntarily, malicious, undermining
contract fruits (see common law stuff)
Honesty in fact + observance of reasonable commercial standards
Quantity can be all of our requirements or as much as I can produce (output)
2-306 Output, requirement and exclusive dealings
(1) Actual output/requirements as may occur in GOOD FAITH, except nothing
UNREASONABLY DISPROPORTIONATE to stated estimates or in absence of estimate,
any normal or comparable amounts.
What is unreasonably disproportionate?
o Past history of parties
o Estimates by parties [set min/max]
o Prior course of dealing
o Prior course of performance
(2) Exclusive dealing imposes UNLESS OTHERWISE AGREED UPON, obligation to
use best efforts to supply.
[If not exclusive dealing, is it illusory?]
*Hard to attack integrated writing in UCC, b/c only essential term is Q. UCC gap fills.
2-201 Statute of Frauds Requirement
(1)
Sale of goods for $500 or more only enforceable if sufficient writing to indicate
contract has been made that is signed by party against whom enforcement is
sought. [doesnt need to be sent to anyone] [dont need to indicate who is
buyer/seller]

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What is writing: 1-201(43) printing, typewriting, any other intentional

reduction to tangible form.
Only enforceable up to amount of quantity [okay if inaccurate] stated in writing.
Okay if other term incorrectly stated. (Unless goods are being used to pay, then
Q of those goods is needed).
(2)

BETWEEN MERCHANTS READ YOUR MAIL RULE

If w/in reasonable time, writing confirming the contract recd and party recing it
has reason to know of its contents, satisfies SOF unless written notice of
objection is given w/in 10 days of receipt. [burden on party recing] OR if
writing not sufficient for SOF, or wasnt sent to right place.

(3)

[EXCEPTION TO SOF] CONTRACT STILL ENFORCEABLE W/O

WRITING IF:
(a) Specially manufactured goods AND not suitable for sale to others AND
substantial performance in making them has begun.
(b) Admittance by party that contract was made (up to Q admitted)
(c) Payment made AND accepted or goods received/accepted
- INTENT TO TRANSFER
- PHYSICAL TRANSFER OF POSSESSION
- ACCEPTANCE

2-202 Final Written Expression: Parol Evidence

Terms of written agreement may not be contradicted by evidence of prior agreement or
contemporaneous oral agreement BUT MAY BE EXPLAINED OR SUPPLEMENTED
[TREATED AS PARTIALLY INTEGRATED]
(a) by course of performance, course of dealing, or usage of trade
(b) by evidence of consistent additional terms UNLESS the court finds the writing
to be complete and exclusive statement of terms agreed to.
1-303 Course of Performance, Course of Dealing, Usage of Trade
**USAGE OR TRADE AND COURSE OF PERFORMANCE CAN COME IN
ALWAYS AS LONG AS NOT INCONSISTENT [MAY SUPPLEMENT OR
QUALIFY]
(a) COP = sequence of conduct b/t parties to a particular transaction IF
(1) agreement involves repeated occasions
(2) the other party accepts or acquiesces w/o objection
(3) ONE instance of performance is insufficient
- two is okay if that would equal 100% of performances
(b) COD = sequence of conduct concerning PREVIOUS transactions before this
transaction (Establishes common basis of understanding)(previous ones must be similar
to this one)

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(c) UOT = practice/method having regularity of observance in place/vocation/trade,

justifies that it will be observed with respect to this transaction. MUST BE PROVED AS
FACTS.
1. Define Trade
2. Show usage exists b/t parties of that trade
Look at: How much usage? (regularity of observance)
Who is bound by it? (members of trade, non-members who are aware
or dealing with members) USE REASONABLE PERSON
STANDARD. If you are brand new: grace period. Did they have
reason to know? Show majority of users do this.
How long?
(e) EXPRESS TERMS construed consistent w/each other. If such construction is
unreasonable: Express > COP > COD > UOT
2-104 Merchants
a person who deals in goods of the kind or otherwise by his occupation holds himself
out as having knowledge or skill peculiar to the practices or goods involved in the
transaction or to whom such knowledge or skill may be attributed by his employment of
an agent or broker or other intermediary who by his occupation holds himself out as
having such knowledge or skill
between merchants = both
[look at this carefully, its not that narrow = if NOT a consumer (ie: you are reselling,
probably a merchant] See: DINAs delectables you fuck up.
2-105 Goods
goods = movable at time of identification of sale (includes unborn young of animals
and crops) NOT MONEY, NOT REAL ESTATE; you can have a sale for future goods
[barns were goods in Buffaloe v. Hart]
Includes 2-107 = things attached to realty timber, oil, gas; capable of
severance without material harm
Includes dealor-distributor relationships (Leibel) WHAT IS NOT UNDER UCC is
hiring someones SERVICES to sell your goods.
IF MIXED: look for predominant factor/purpose/thrust (language of contract, nature of
business of the supplier, intrinsic worth of materials) PRINCESS CRUISES TEST
Where labor is devoted to creation of goods probably goods but check using test.
2-305 Open Price Term
Parties can conclude a contract even if price is not settled. Price will be a reasonable price
at time of delivery if: nothing is said to price, is left to be agreed or failure to agree, or
price is to be fixed to agreed market terms or standard. MAKE SURE THAT THEY
FIRST INTEND TO AGREE TO DO THIS.
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Price to be fixed by the seller or buyer in good faith.

When one party fails to fix price through fault, other can fix or treat contract as canceled.
If there is no intention to be bound by parties, and the price isnt fixed or agreed, no
contract. Must return goods, or if you cant, pay reasonable value at time of delivery.
***DIFFERENT RULE FOR COMMON LAW court will generally not enforce price
unless calculated formula
2-204 Formation in General
1.
Any manner sufficient to show agreement, including conduct which
recognizes a contract exists
2.
Agreement sufficient to constitute contract even though moment of making is
undetermined
3.
Even though one or more terms are left open, no failing for indefiniteness if
the parties have intended to make a contract and there is a reasonably
certain basis for remedy.
a. More terms open, less likely to have agreement
2-205 Firm Offers (Option Contracts) MADE BY A MERCHANT (not, nonmerchant)
Signed writing (at minimum, initials authentication is essence of this section) which by
terms gives assurance to be held open, not revocable for lack of consideration, not to
exceed 3 months if no time stated NO CONSIDERATION NEEDED (likely to accept
electronic communication)
If assurance is on a form supplied by the offeree, the offeror must sign the assurance
separately!!!
OPTION CONTRACTS CANNOT BE ORAL will be revocable.
2-206 Offer and Acceptance (Contract formation)
1.
Unless otherwise unambiguously indicated by language or circumstances
a. Offer = inviting acceptance in any manner by any medium reasonable to
the circumstances (look to common law)
b. See 2-206 for shipment/conforming goods/inviting acceptance (either
shipment or prompt promise to ship is proper means of acceptance)
c. Where beginning of performance is reasonable mode of acceptance, an
offeror who is not notified of acceptance within a reasonable time may
treat the offer as lapsed. (beginning of performance must unambiguously
express the offerees intention to engage himself; you have to have
NOTICE to other party; HOWEVER, under common law you can still
have performance having a temporary bar to revocation)

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2-207 Additional terms in acceptance/confirmation

prevents last shot rule from controlling terms of contract (overrides mirror image rule)
[Assume we have an offer already by this point see common law rules for offer]
#1 IS FOR MERCHANTS OR NON-MERCHANTS
1.
A definite and seasonable [at or w/in time agreed or reasonable time]
expression of acceptance OR written confirmation operates as an
acceptance, UNLESS expressly made conditional on assent to the
additional OR different terms.
(make sure you actually have an expression of acceptance)
(if you expressly condition acceptance, then you have counteroffer; can only be done with clear and definite language;
material difference not enough) My acceptance of your offer
is conditional on your assent to all the terms of my
acceptance= COUNTEROFFER IN UCC AND COMMON
LAW
(you can have oral agreement, with written confirmation after.
Terms become part of agreement if they reflect oral agreement.
You cannot have conditional acceptance after you have an oral
agreement)
#2 IS BETWEEN MERCHANTS ONLY ARE THEY MERCHANTS?
IF NOT, Additional terms NOT part of contract but proposals for additional terms.
2.
Additional terms are proposals for addition to contract. Terms
become part of the contract UNLESS
a. Offer expressly limits acceptance to terms of offer
b. Material alteration (surprise or hardship test)
c. Notification of objection to them has already been given, or is given
within a reasonable time after notice of them is received
i. If no response of objection given, inclusion has been assented
to.
***cant have silence!
* #2 only for additional terms. However: 1)comment three says additional and different;
2)different terms should be subject to same analysis b/c they will almost always
materially alter so it doesnt matter; 3)knock out rule: they fall out, we are left with
whatever was agreed upon as contract
3.

Conduct by both parties sufficient to make a contract although

writings do not establish one. In this case you have terms on which
writings of parties agree, together with any supplementary terms in
provision of this Act. (Actions speak louder than words)

2-207 REVISED says everything not agreed upon = UCC gap fillers
2-309 Notice of Termination

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(2) Where contract 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.
Good faith + commercial standards = reasonable time
(3) 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.
Notice: enough not to be stripped of investment totally
Parties can agree: no notice needed, gap fillers waived, unless unconscionable
2-313
Express warranty created by:
1. Affirmation of fact or promise that creates an express warranty that
goods shall conform to affirmation or promise
2. Description of the goods
3. Sample or model
4. No formal words express or guarantee needed
5. PURPORTING OPINION IS NOT ENOUGH, neither is
affirmation of value
6. Past deliveries can set a description of quality
7. Technical descriptions are okay
2-314 Implied warranty of merchantability (implied in law)
for ALL goods sold/produced by a merchant (not resale in this context, more strict than
UCC). Not applied to a non-merchant sale/ SELLER MUST BE MERCHANT
Quality
Fit for ordinary purposes
YOU CAN EXPRESSLY DISCLAIM
o Pass w/o objection in trade under contract description
o Fair/average quality
o Fit for ordinary purposes
o Even kind quality and quantity
o Adequately contained, packaged and labeled as agreed
o Conform to the promise or affirmations of fact made on label/container
2-315 Implied warranty/fitness for particular purpose
where seller has reason to know of purpose + buyer relies , creates implied warranty
(implied in fact)
Buyer has specific purpose [usually something other than ordinary purpose]
Seller knows of specific purpose
Buyer relies on sellers expertise in fulfilling his needs of special purpose
Goods dont have to be generally defective, just not effective for buyers specific
purpose

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2-316 Disclaiming warranties

(2) to exclude, language must include mention of merchantability and be conspicuous
(Reasonable person would notice). Language to exclude all implied warranties is
sufficient IF there are no warranties which extend beyond the description on the face
therof.
(3) unless otherwise, all implied warranties are excluded by expressions like as is, with
all faults, or something else that calls buyers attention to the exclusion AND
buyer examined the goods/sample/model as fully as desired OR has refused to examine,
there is NO IMPLIED WARRANTY with regard to defects which an examination ought
reveal AND an implied warranty can be excluded or modified by course of dealing or
course of performance or usage of trade
CONTRACTS CAN HAVE BOTH IMPLIED MERCHANTABILITY + IMPLIED
FITNESS

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