CONTRACT FORMATION / CONSIDERATION / MUTUAL ASSENT

FOR:
o Limitation of freedom (participation in action) / forebearance / performance / promise
o Found when giving satisfaction clause to come and try product or store
o Exchange for a chance (to be in a movie per se) is deemed consideration
o Reasonable standard they would understood offer
o Terms used
o Objective Theory Reasonable person believes contract formed
o Requirement/Output Ks may have consideration from past dealings (good faith)
AGAINST:
o Objective Theory - Belief contract is Joke (vs. subjective vs reasonable objective person)
o Lack of Certainty of Subject Matter (vague terms) then just prelim negotation
o Gratuitous Promise / Nothing in return (lack of consideration)
Some conditions still are gifts unless out of giver control
o Illusory Promise (Satisfaction clause) Unlimited freedom of action
Commercially Reasonable, Personal (Good Faith)
Termination by Reasonable notice (not illusory)
Implied Good Faith Exclusive Contracts (Agency type deals)
ALL one needs (Good faith obligation)
o No notice of terms/no assent
o Prior actions/performance aka past consideration NOT VALID
o Further authorization needed
o EXCEPTION: QUASI K, Promissory Estoppel
OPTION K
FOR:
o Extension of offer explicitly
o If no attempt to revoke, consideration to keep open doesnt matter
AGAINST:
o No consideration paid so still revocable
OFFER
FOR:
o Reasonable expectation to be bound
o Ad as offer (needs indication of quantity, accepting people, unlimited implication OK)
o Agreeing to agree later (good faith)
AGAINST:
o Lapsed (unless specify delivery date) (Order today!) (end of a meeting)
o Joke (illustrated by name, words, type, etc)
o Ad was invitation, return check was offer, product sent was acceptance (if w/ terms is a counter offer
under Mirror Image acceptance by keeping it)
o Not in class of people allowed to accept (Ads may/may not limit class)
o Lack of definiteness
o Reasonable expectation in offeree of offer
o Price Quotes/Estimates (unless definite terms implied or additional communication)

ACCEPTANCE
FOR:
o Objective person would find action acceptance, non verbal actions indicate
o CL Mirror Image Rule
o Shipment = Acceptance

o Bilateral Promise for Promise (words, context,etc)

o Context with reasonable determination do indicate acceptance
o Not found conditional on terms of acceptance (2-207)
AGAINST:
o Silence not acceptance
o Words in context dont indicate acceptance (enthusiasm, interest, soliciting of interest)
o Offeree did not inform offeror within reasonable time (unilateral offer)
o Accepted without knowing it (bilateral)

REVOCATION
FOR:
o Knowledge of revocation from reliable source Revoked
o Lapsed (reasonable time passed)
AGAINST:
o Unclear of sources validity, however should still put on notice to check
o Part Performance (already performing offer that is specific to offer at hand)
PRE EXISTING DUTY
FOR:
o No consideration for prior duties in altering K (seeks to enforce prior deal)
AGAINST:
o Recission of old K, in favor of new K
o Addition/Gift was a gratuitous one
SOF

FOR (satisfying):
o Unsigned, but detrimentally relied upon (passed up other opportunity of sale, made further
investments/actions)
o Initial for signature (if note is written by author, IDs author)
o Creation of unique goods (without signature)
o Professional Service over $500 are not covered by SOF
o Many memos combined as one
o Admission (without signature)
o Merchant Exception Satisfied within 10 days of receiving other party signed memo
AGAINST:
o Sale of goods over $500 unsigned (item is or isnt a good?)
o Check facts, was there a signature??? If not just raise possibility
o Over one year contract (closing date multiple years later)
Absence of over 1 year necessity, not covered by SOF (minority)
o Possibility of Termination in 2 year deal (may be under a year)
o Essential terms NOT written

INFANCY
FOR:
o Under age (pending on rule, repay benefits or not)
o To void contract (so not good for party looking to enforce to obtain)
AGAINST:
o Item was a necessity (interpreted strictly)
o Affirms if doesnt disaffirm after turning 18
o Collect reasonable value of work (taking parts back etc) as resolution
INCAPACITY

FOR:
o

Possibly old age, mental health = inability to comprehend that no person would have made similar
transaction (could be evidenced by multiple transactions)
o Cognitive Condition deprives understanding of what is doing
o Affective Other party knows, one is unable to act in reasonable manner
AGAINST:
o Even though transaction was unreasonable, she understood

DURESS
FOR:
o Improper Threat, w/ no reasonable alternative, money damages inadequate
o Illustrated by changed circumstances
o Site specific monopoly exploiting lack of further choices
AGAINST:
o No threat (raise/threat to breach isnt a threat)
o Consideration (alter order by adding a duty)
o There was a reasonable alternative (such as suing for breach)
o Not a brazen effort to use desperation to extort
MISREPRESENTATION
FOR:
o Nondisclosure (affirmative, nondisclosure, half truth)
o Must be material in terms of agreeing to it
AGAINST:
o Caveat Emptor, investigation would easily reveal
o Casual Conversation (No problem in business convo) Reliance not jusitified
o Sales puffing
o Honest Mistake (Doesnt matter)
UNCONSIONABLE
FOR:
o Reasonableness for arbitrator (location for business, arb isnt only chosen by business)
o Unable to sign and understand terms (lack of time to sign)
o Overbearing substantive (forum selection across the country) in lack of procedural
o No notice, unfair surprise (fine print, deceptive)
AGAINST:
o Businessman in position negotiate (potentially with others)
o Sole choice in arbitrator (not negitoated for)
o Liability limitations to common (unless substantively uncon)
o Does not exist at time of contract
PUBLIC POLICY
FOR:
o Issue would disservice similar public goal (is legislature concerned?)
o Could be used for potentially non pub pol goal. (specific known one time use strengthens argument
here)
o Concerns a necessity
o Waivers unenforceable against negligence/intention
o Forum Selection clause Violate access to courts
AGAINST:
o Disclaimers for neg against pub pol (OK if not public nessicity)
o Not close enough analogy to public issue at stake

o
o

Concerns a luxury
Other legitamate uses

STANDARD FORM / ADHESION K (or Clause) also think unconscionability

FOR:
o Meaningful choice, no monopoly, ability to shop around
o No specific notice does not matter
AGAINST:
o Against reasonable expectations
o Public necessity
o No meaningful choice, nor meaningful assent
o No notice of terms/No assent
INTERPRETATION
FOR:
o Objective scope, trade custom
o Text V. Context (illustrate both)
o Too little context
o Reasonable Notice = 90 days
AGAINST:
o Subjective belief, other party had understanding of
o Too much dictionary definition
o Equally reasonable meanings no K
P.E.R.
FOR:
o Separate/Collateral transaction
o Does not contradict writing, may add to it
o Clerical mistake (bad argument)
o Does NOT apply to formation defenses (mistake, duress, etc)
o Document cant prove own completeness (Corbin approach) Consider if persuasive
AGAINST:
o Merger Clause
o Appears complete
o Contract on its face (Four corners) did it leave anything out?
GOOD FAITH
Violates spirit of K, exposes loopholes, hides rights
PERFORMANCE/CONDITIONS/BREACH/SUBSTANTIAL PERFORMANCE
FOR:
o Breach material (essential purpose defeated), duty not owed
Seek restitution for uncompensated benefit
o Implied condition breached so no duty
o Services = constructive conditions of payment (duty)
o Failure of Ordinary/Implied condition is promissory b/c in ones own control
o Breach material, but divisible (delinieated by measurement, item. Etc)
o No control = ordinary condition, control over = promissory
AGAINST:
o Breach not material, substantial performed, duty still owed
Perfect Tender Rule No Substantial performance
o Oridnary Condition failed (event that must occur pre performance)

o
o

Condition prevented by waiver, prevention

Not divisible unknown quantity, so set by number, and no use for partial complete

MUTUAL MISTAKE
FOR:
o Mistake as to material element by both parties (idea that something could be built/complete but not)
o Investigated and no risk/mistake in thought present (risk not allocated)
o Belief have full knowledge
AGAINST:
o Mistake was foreseeable, implicitly allocated to buyer
o Risk explicitly allocated
o One may be unsure
o Claims that something could be done (or being an expert) would devalue mistake idea
UNILATERAL MISTAKE
FOR:
o Seller knew of possible mistake, in better position to control it, should have warned buyer and bears
risk
AGAINST:
o Did not know, had no reason to know, no reason to warn of mistake
o If they did make mistake but enforcement may be unconsionable
IMPOSSIBILITY -seller
FOR:
o Unexpected supervening occurrence (nonoccurrence assumed at time of K)
o Risk not explicitly/implicitly allocated
AGAINST:
o Implicitly Assumed Risk, not an assumption made by both parties (product development may not pan
out)
o Best position to anticipate risk / Sellers assume risk of product shortages / foreseeable
o Business would be put in jeopardy by meeting demand for unexpected event
o Seller/Business can make alternate arrangements?
FRUSTRATION OF PURPOSE -buyer
FOR:
o Frustrates basic value/purpose of contract (ex: existence of something/event) from unforeseen event
AGAINST:
o Event was foreseeable and in control of buyer (thus risk allocated to Buyer)
o Other party was better situated to evaluate and plan accordingly
o Fixed price Risk to seller
Remedies
Punitive Damages
o FOR:
Not available in K Law
o AGAINST:
Independent Tort, Insurer refusing to pay, involve vital personal concern
Restitution
o Unconferred benefit, value received back
Specific Performance
o FOR:
Uniqueness

 Money Damage Inadequate

Land (if selling rather than obtaining, unique land is relevant and may take expectation)
Cover unattainable
o Against
Personal Services issue of involuntary servitude
Too hard to police
Reliance Damages
o FOR:
Uncoferred benefit, value wished to be received back (return to state if hadnt relied on K)
Opportunities clearly passed up by relying on contract
o AGAINST:
Would not have accepted other offers was reliance justified???
Expectation Damages
o
Mitigation
o FOR:
Attempted to find reasonable cover + Incidental expenses
Finsihing job may be mitigating, if lessens overall damages
o AGAINST:
Cover would be inferior or substantially different
Speculation as to quality of cover in comparison
Cant pile on damages
Foreseeability
o FOR:
Knowledge that both parties hold that breach could create bigger issue (loss of present for
Xmas)
Notice of what breach could entail (loss of scholarship, business, etc.)
Info divulged prior to contract
Extent of damage does not matter, just foreseeability
o AGAINST:
Not expected to know result of breach (consequential damages unknown)
Did not agree to responsibility of extreme sensitivity divulged prior
Reasonable Certainty
o FOR:
Cover would prove certainity of value
o AGAINST:
Too difficult to show (loss of reputation)
Causal connection too uncertain (may excaterbate foreseeability problem)
Lost Volume Seller
o FOR:
Can supply other buyers (overstocked, endless supply)
o AGAINST:
Wouldnt have sold otherwise, passed up other deals
Stipulated Damages Clause
o FOR:
Hard to predict/calculate at time of K, reasonable estimate
o AGAINST:
Unreasonably large, no relationship between amount and day (1 day late = penalty), Sliding
scale replacement
Constant amount regardless of day/breach
PROMISSORY ESTOPPEL
FOR:

Reliance on promise was foreseeable, reasonably relied upon, and lack of enforcement would be unjust
Recovery Affirmative (Reliance didnt miss other opportunities), Negative (Expectation Missed
other opportunities)
AGAINST:
o The person truly did not rely on promise
o Reliance was outside of scope
QUASI K
FOR:
o Enrichment occurs (that was unjust)
o Recovery Market Price (usually) or Value of Goods
o Complicit in Mistake
AGAINST:
o Resulted from gratuitous, or officious
o Unknowing, mistake, not complicit in
o
o