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BARGAIN THEORY -- (need promise, benefit, consideration)

1. prelim negotiations: Invitation to make an offer Longernan v. Solenick


2. OFFER a. Offer good for reasonable time if not specific time noted
b. Rstmt §26: standard is what the reasonable o’or would have understood to be
an offer - is “I accept” is sufficient to conclude the deal
c. target not specified: doesn’t mean it isn’t an offer
d. statements of opinion are not offer
e. needs to be clear and complete
3. ACCEPTANCE: meeting of the minds?
4. NOT ACCEPTANCE
a. Lapse: Offeror always has right to set time limits: usually 7 days and time normally
needed for letter to arrive - if not time set, it is end of reasonable time.
b. Revocation:
a. Mailbox Rule: Acceptance effect on dispatch, Revocation effect on receipt
Henthorne v. Frasier
b. Medium of Acceptance:
i. offeror may impliedly accept other mediums than one which offer made
ii. UCC: offeror invites acceptance by any reasonable means (p.58-9).
Offeror must say if medium is not ok.
c. When o’or acts in a way that is counter to or inconsistent to the continuation of
the offer then it is revoked if o’ee has constructive of actual knowledge of revok.
Normaile v. Miller
c. Rejected/Counter offer. Normaile v. Miller
5. CONSIDERATION (BARGAIN THEORY?)
a. Is it a Sealed Contract/Formal Contract?
a. Seal (15 states). Extends statute of limitation
b. Not for Sales of Goods
b. Informal Contract: need consideration
a. .Benefits/Detriments
-Implied detriment could be met with benefit to the promisor
-Not using legal right to do something is a detriment
b. Restatement §79 blew away Hammer. If bargain there is no need for benefit
and detriment, but there have been recent cases (p.101) where benefit-detriment
used.
c. Bargain Benefit must induce detriment which induces the benefit. Benefit and
detriment are the same: quid pro quo.
c. Must be mutual -- See DuPont v. Clairborn
d. Must be simultaneous -- See Plowman
6. DAMAGES
a. Expectation
ALTERNATIVE TO BARGAIN THEORY: If no consideration, consider this!!

I. Implied in fact
A. Incomplete bargaining
B. Implied from conduct and intent of parties
C. Damages = Expectation and Quantum meruit
II. Implied in law
A. Made up by court
B. Prevent unjust enrichment
C. Damages = Restitution (out of pocket)
III. Moral Consideration
A. Promise made after the act
B. Material benefit to promisor
c) Promise is the consideration
d) Damages = Expectation
IV. Promissory Estoppel -- Restitution
A. §90!!!!!
1. Promise
2. foreseeable that it induces action
3. it does induce action
4. injustice only avoided by enforcement of promise
5. Enforcement limited to as justice requires
B. Family (See also, equitable estoppel in Ricketts)
1. promise
2. detrimental reliance (legal right) See Grenier v. Grenier
3. action
4. Prevent injustice
C. Charities See Allegheny, United Jewish Appeal, Coretta Scott King
1. Probability of reliance is critical factor
D. Commercial
1. Reasonably foreseen reliance, Universal Computers
2. Doesn’t have to be legal entitlement See Katz v. Dany Dare
REVOCATION OF OFFERS
I. Offers are fully revocable before acceptance
II. Exceptions
A. Unilateral contracts lost dog, reward
1. Once performance begun, cannot revoke §45
B. Pre-Acceptance Reliance §90 See Drennan
1. promise
2. foreseeable that it induces action
3. it induces action
4. injustice only avoided by enforcement
5. Enforcement limited as justice so requires
C. Option Contracts §87 See, Hoffman v. Red Owl
1. Nominal Consideration Berryman v. Kmoch
2. §87
a) reasonable reliance
b) reasonable foreseeable
c) Substantial character of reliance
d) binding to extent to avoid injustice
D. Firm Offer§2-205 See Mid-South Packers v. Shoneys
1. Sale of goods only
2. One merchant
3. in writing
4. it must state irrevocability - at most it can be three months
5. If form provided by o’ee, o’or signs twice (bottom and firm statement)
BATTLE OF THE FORMS

I. Look for Offer - Common law definition


II. Find Acceptance
A. Common Law - favors the seller See Poel (rubber seller)
1. Mirror Image Rule - Last shot rule
a) Each new form is a counter offer
b) Acceptance only if mirror image
c) Taking of goods = acceptance of invoice terms
B. UCC §2-207 - favors the buyer/o’or See Brown v. Hercules
1. Almost like a first form rule
2. Performance/silence are not assent.
3. Terms are in unless
a) one is not a merchant
b) offer expressly limited the terms
c) there has been a notification of objection
d) material alteration
(1) Measure by surprise and hardship
(2) Material alterations: Warranty limitations, choice of law or
forum.
(3) Indemnification clause: material alteration b/c not paying
up for your faults See Dale Horning
e) Different (non-material) Terms
(1) 3 Ways to treat additional terms (1 + 2 most common)
(a) Treat as additional, apply §2-207, find as mat. alt
and throw out
(b) Say §2-207 doesn’t apply ∴offeror’s terms gover
(c) Knock Out Rule (seller’s form was offer) See
Diacom
PAROL EVIDENCE RULE
I. Contract must be
A. written
B. fully integrated
1. Williston’s Rule
a) Merger clause?
(1) Yes, then it’s complete
(2) No, does writing look complete on it’s face (4 corners
rule)?
(a) Yes -- Presume total integration, but allow for intro
of evidence of collateral agreements
(b) No -- Allow Parole evidence
II. COMMON LAW: Restatement 214
A. Assumes partial integration
B. Parole evidence allowed to establish
1. if writing not integrated
2. whether writing complete (collateral agreements)
3. meaning of the writing (vagueness = partial integration
4. invalidating causes
a) fraud, duress, illegality, mistake, lack of consideration
III. UCC §2-202
A. Assumes partial integration
B. if fully integrated disallows prior and contemporaneous oral but
C. allows contemporaneous written
IV. Collateral Agreement Rule
A. Can’t challenge or contradict written k
B. Subject must be distinct
V. To get Parol evidence in:
A. argue ambiguous document
B. document is complete in what terms are included, but other terms are excluded.
DEFENSES
Unconscionability gets you out bad clause
Other defenses get you out of k

I. Duress -- §175
A. Improper threats (§176)
1. crime or tort
2. criminal prosecution
3. use of civil process w/bad faith
4. breach of duty of good faith See Totem Marine v. Alyeska
B. Unfair terms and
1. harms π w/o benefit to ∆
2. prior unfair dealings
3. use of power for illegitimate ends
II. Undue Influence
A. 2 types:
1. psychological dominance
2. confidential relationship
B. Look for: See Odurizzi
1. suseptability
2. opportunity
3. benefit to the accused
4. π not have opportunity to talk with counsel
III. Misrepresentation See Syester v Banta
A. Material FACT
B. can be done innocently, negligently, knowingly
C. believed by hearer
D. hearer acts
E. hearer suffers a loss
IV. Non-Disclosure
A. §161 : affirmative duty to disclose See Hill v. Jones
B. Warrantiesare implied §2-314, §2-315
C. Material fact
D. Causes (at least in part) π to act
E. Will push courts to look beyond merger clause
V. Unconscionability -- scalpel
A. §2-203, §208
B. Unfair Surprise
C. Oppression
BREACH- CONDITIONS CHART
I. What was promised?
II. What was done?
III. Condition or a promise?
A. Condition
1. Look at the facts, how reasonable were the parties expectations
2. Wording off the k
3. Cts prefer to keep it alive
B. To Get out of a Condition
1. Excuse
2. Waiver See US Fidelity
3. Substantial Performance See Inman (claim,6 months)
4. Promise See Jones (no permit for landscaping)
5. Anticipatory Breach See Sackett v. Spindler
6. Materiality
7. Forfeiture See JNA Realty (prevent eviction)
IV. Breach
A. JUSTICE AND EQUITY to determine if clauses are
1. independant See Reading pipe case
2. dependent
3. a little of both
B. Materiality - if material, breach is total, if not, breach is partial
1. extent injured party will obtain material benefits
2. injured party’s compensation so far
3. how far along in performance
4. hardship on breacher in terminating k
5. willful/negligent behavior of breacher
6. will breacher perform rest of k
DAMAGES
I. Expectation Damages (pay as if k had taken place)
A. BARGAIN
B. MORAL CONSIDERATION
C. IMPLIED IN FACT
II. Reliance Damages (out of pocket and loss of opportunities)
A. §90 - PROMISSORY ESTOPPEL
B. Can also request specific performance here!
III. Restitution Damages (out of pocket)
A. CONTRACT IMPLIED IN LAW
IV. Quantum Meruit (Court will decide worth of k)
A. CONTRACT IMPLIED IN LAW
B. CONTRACT IMPLIED IN FACT